Art directors guild absorbs two smaller craft unions

The Art Directors Guild has put the finishing touches on its controversial merger with two smaller unions representing illustrators and set designers.

The three-way merger was one of the last acts of Tom Short before he retired last year as president of the umbrella labor organization International Alliance of Theatrical Stage Employees. Short argued the combination would strengthen the bargaining clout of the guilds and reduce turf fights between them.

But the action was deeply unpopular among members of Local 790 (illustrators and matte artists) and Local 847 (set designers and model makers). Members of the locals voted it down, fearing they would lose autonomy and be forced to join a union dominated by art directors who act as their supervisors.

Despite the opposition, the National Labor Relations Board refused to block the merger at the request of the locals.

The Art Directors Guild said Thursday that it had completed a restructuring to combine the operations of the three unions that included naming a new 20-member board with reps from each of the crafts.

As expected, Scott Roth will remain as executive director the Art Directors Guild, which now has 2,000 members, up from 1,500. Marjo Bernay, former business agent of the two locals who was also elected a trustee on the new board, is negotiating a possible ongoing operational role in the union.

"We're looking forward to working cooperatively with all the crafts working under the same union," Roth said in a statement. He said there would be no layoffs as a result of combining the staffs.

Joseph Musso, former president of Local 790, who opposed the merger, said he and others have little choice but to go along with the new marriage. "We're trying to make the best of something that we're not totally enthralled with," said Musso, who is a member of the new executive board.

-- Richard Verrier

Activist shareholder Carl Icahn is tightening his grip on Lions Gate Entertainment, revealing for the first time that he may seek board seats to increase his influence over the company’s Santa Monica movie and TV studio, according to a recent regulatory filing.

There is speculation that Icahn, who just upped his stake to 14.3%, will look to put son Brett on the board. The 29-year-old, who works closely with his father at Icahn Partners, has been the point person between the investment firm and the management of Lions Gate led by Chief Executive Jon Feltheimer and Vice Chairman Michael Burns.

Although the two executives have so far had a good working relationship with Icahn, according to a person close to the investor, the billionaire is also known to push for changes if a company continues to stumble badly. Lionsgate stock recently posted poor fiscal third-quarter results due to the weak performance of its movies. That said, over the weekend, the studio had the top-grossing movie at the box office when “Tyler Perry’s Madea Goes to Jail” debuted with $41 million in ticket sales.

In a filing with the Securities and Exchange Commission this week, Icahn said he may seek to add members to Lions Gate’s board either by expanding the board or by “removing individuals." He also said that such an action could occur at Lions Gate’s next annual shareholders meeting, typically the second week of September, or  a “special" meeting could be called earlier.

Brett’s name first emerged in a story this morning posted online by the New York Post.

In a brief phone interview Wednesday, Brett Icahn declined to comment on any moves that his father is making on Lions Gate, including whether he will request a board seat. He acknowledged that the Icahns are in close contact with  Feltheimer and Burns. “Absolutely, we’ve talked to management before,” he said.

-- Claudia Eller

Photo: Mark Lennihan/Associated Press

Rupert Murdoch issued the following memo to News Corp. employees to announce that Peter Chernin would not be renewing his contract:

February 23, 2009

Dear Colleagues:

Today, we are announcing that Peter Chernin, our President and COO, will not be renewing his employment contract. Peter will be taking up the opportunity to start a new motion picture and television production venture with Fox.

Many of us who have worked with Peter over his 20 years with the company can attest to his leadership, his diligence, and his wisdom. I can also testify to Peter’s friendship, dedication, and honesty. He has been a close colleague and an ally to me for many years.

While Peter has distinguished himself at News Corp, he has also, increasingly and tirelessly, circled the globe in support of Malaria No More, which has achieved nothing short of remarkable results. Let us all wish him the best of luck, and the greatest success, as he embarks on this new chapter of his career, both as a professional and as a role model for an executive who gives back.

As you all know the downturn we are operating in is more severe and global than anything we have seen before. No company is immune to its effects. I want to take this opportunity, today, to write to you about how we will manage such an important leadership transition, and why I am convinced that today our company is not only well-positioned financially and competitively, but is on the cusp of a new phase of growth. Remember, we began priming ourselves for a weakening economy over a year ago. We have managed expenses and capital expenditure prudently, and strengthened our balance sheet. Following the partial sale of NDS, we will have over five billion dollars in cash, and this year we should exceed $3.5 billion in adjusted operating income.

Peter Chernin, president and chief operating officer of News Corp., just sent out a companywide memo confirming he is leaving the company when his contract expires in June:

I wanted to let you know that I have decided to leave News Corporation when my contract expires on June 30th.

This is not a decision that came easily, but after more than 12 years in my current job, 20 years at Newscorp, and 30 years of corporate life, I am ready for new entrepreneurial challenges. I would not be making this difficult decision if I were not confident in the superb management team we have at Fox and in the visionary leadership of Rupert Murdoch. I have worked closely with Rupert every day, and I know he shares my belief that Fox executives are the best in the business.

I want to thank Rupert for his remarkable support, encouragement and friendship over the years. No company in our industry can match News Corporation's track record of creating opportunities for employees and there is no better example of that than the opportunities Rupert has given me over the years.

I also want to thank all of you for the privilege of working side by side with such a talented and deeply principled group of colleagues. I am not only deeply proud of your achievements, but even prouder of the character and integrity of the company.

Over the next several months, Rupert and I will work closely to make sure this is a smooth transition for everyone. Thank you for the dedication and enthusiasm that you have always shown and I know will continue to show as the company moves forward to even greater heights.

Peter Chernin

In this Aug. 5, 2008 file photo, Peter Chernin, president & COO of News Corp., is seen on the floor of the New York Stock Exchange. News Corp. on Monday, Feb. 23, 2009 said Chernin will leave the company in June. (AP Photo/Richard Drew, file)

The board of the Screen Actors Guild, as expected, rejected the "final offer" by the Hollywood studios for a new contract covering the union's 120,000 members, creating fresh uncertainty about whether and when the seven-month labor dispute will end.

The rejection was widely anticipated because the studios' proposal contained a provision that SAG negotiators viewed as a non-starter.  Nonetheless, the move is likely to deepen anxiety in the movie industry, where production activity has already slowed.

The studios and SAG appeared close to striking a deal earlier this week after the union's negotiators made what they said were key concessions, including accepting a framework for how actors will be paid for their work in content distributed on the Internet. That framework is modeled upon terms agreed to by three other Hollywood talent guilds.

But SAG negotiators balked at the studios' demand that the union's contract expire in three years, rather than two years. Studio executives insist that a three-year contract is necessary to ensure stability. A three-year deal, however, would mean SAG's contract would expire a year later than the labor contracts of the American Federation of Television and Radio Artists, and the writers and directors guilds.  SAG leaders believe that would weaken their bargaining clout by preventing them from joining forces with the other unions in the next round of contract negotiations.

In a statement, SAG accused the studios of inserting a "last-minute and surprise demand" that was not brought up in earlier negotiations, including during federal mediation talks in November.

"By attempting to extend our contract expiration one year beyond the other entertainment unions, the AMPTP (Alliance of Motion Picture and Television Producers) intends to de-leverage our bargaining position from this point forward. ... The AMPTP has clearly stated their need and desire for financial certainty and industry peace.  This new proposal does the exact opposite, and will only result in constant negotiating cycles and continued labor unrest."

The AMPTP responded that its offer was “strong and fair” and that it had always sought a three year deal with SAG. "We have kept our offer on the table -- and even enhanced it -- despite the historically unprecedented economic crisis that has clobbered our nation and our industry." 

SAG's board stopped short of asking union members to approve a strike, fearing that the deep recession makes this the wrong time for such action. People close to the union, who did not want to be identified because they were not authorized to speak on the record, say the next logical step for SAG representatives is to initiate back-channel contacts with some senior studio executives to see if a showdown can be averted (typically, negotiations are conducted through the studios' negotiating arm, the Alliance of Motion Picture and Television Producers).

Meanwhile, SAG is preparing to begin negotiations Monday with producers of commercials, which are covered under a separate contract.

-- Richard Verrier

 

UPDATE: Disney says the reorganization will also create one group to identify "development opportunities" for the parks, not "acquisitions." The previous information was based on a statement erroneously provided by the company.

The Walt Disney Co. has announced a broad restructuring of its parks and resorts operation -- a move that sets the stage for more job cuts in the coming weeks.

The large-scale reorganization, which encompasses Disneyland, Disney World, cruise ships and resorts that it runs in places like Hilton Head, S.C., comes on the heels of last month's buyout package offers to 600 parks executives.

"These changes are essential to maintaining our leadership position in family tourism and reflect today's economic realities," Jay Rasulo, Parks chairman, said a statement.

Under the new structure, facets of Disneyland and Walt Disney World will be consolidated into a single domestic operation, to be headed by Worldwide Operations President Al Weiss.

Rasulo said the company would streamline its operating structure to simplify the operations -- and in the process, reduce overhead. He said the reorganization was a further step in an operational review begun in 2005 at Walt Disney Parks and Resorts, although he acknowledged that the bleak economy has accelerated the pace of the changes.

Disneyland Resort President Ed Grier and Walt Disney World Resort President Meg Crofton will continue to oversee the ride operations and other facets of customer attendance. However, Weiss' group will take over functions that cut across parks, such as procurement, menu planning and ordering stuffed animals.

The operations of Walt Disney Imagineering group will also be simplified. Chief Creative Executive Bruce Vaughn and Chief Design and Project Delivery Executive Craig Russell will continue to oversee the development of attractions for all Disney parks and resorts. But the group will no longer have separate groups devoted to development for resorts, entertainment and attractions.

A new global business development team will combine real estate development and business development under Executive Vice President Nick Franklin.

The changes are intended to streamline the organization and create one group that identifies possible acquisitions and park expansions, another that implements it and a third that is in charge of operations, company officials said.

The restructuring probably will result in job cuts, on top of the buyouts offered in January. It's unclear how many positions will be lost.

"Organization changes require difficult decisions, including the elimination of some roles," Rasulo said. "These decisions were not made lightly and we know this will be a challenging transition. The people affected are our friends and colleagues"

--Dawn C. Chmielewski

Photo credit: Timothy O'Rourke / Bloomberg News

CBS Corp., seeking to stave off a cash crunch and a downgrade its credit rating, slashed its dividend by more than 80% to 5 cents a share from 27 cents.

The broadcasting giant, releasing fourth-quarter results after the market closed, said net income plunged 52% to $136.1 million from $286.2 million in a year earlier.

Revenue was down a more modest 6% to $3.5 billion for the quarter compared with nearly $3.76 billion for the same period in 2007. The company attributed the lower top line to advertising weakness, partially offset by higher affiliate revenue from Internet media company CNet.

The dividend cut was even larger than Wall Street analysts had been expecting.

Chief Executive Leslie Moonves explained the reduction by pointing out that CBS had long been generous with its cash to investors but the economy now required the company to adjust its policy.

"CBS continues to produce strong cash flow, and we have returned $5.5 billion of that cash to shareholders in just three years as a stand-alone company," Moonves said. "However, by taking this step now, we will further strengthen our financial flexibility to meet our debt obligations even in difficult credit markets, and still provide our shareholders with an attractive dividend.”

Said CBS Executive Chairman Sumner Redstone, “We are clearly in the midst of one of the most difficult financial environments in history, with very little visibility on how long these economic conditions will continue or if there is worse to come."

Moonves, in a conference call with analysts, declined to give much guidance on the current first and upcoming second quarters. But he said he expected the second half of the year to be stronger for the company because CBS will have rerun revenue from the syndication of five TV shows "hitting the books" this fall.

-- Meg James

As the Screen Actors Guild and the major studios resumed contract negotiations today, Hollywood's below-the-line laborers wanted to deliver a message: "Let's get back to work."

About 100 film and TV workers, including cinematographers, studio drivers, makeup artists and prop makers, staged a rally this morning outside the Sherman Oaks headquarters of the Alliance of Motion Picture and Television Producers -- the negotiating arm of the studios -- urging the parties to "reach a speedy resolution to the current stalemate."

Rally organizers said their purpose was not to take a position on the contract dispute, but to convey a sense of urgency about how the continuing stalemate was creating hardships for entertainment industry workers.

"We decided we needed to be seen physically,'' said Ed Gutentag, a cinematographer and spokesman for the self-described "Let's Get Back to Work" coalition. "We're not taking sides, we just want to send a message that we're suffering by their inability to come up with a deal."

Actors have been working without a contract since June 30, creating an atmosphere of uncertainty that has contributed to a steep falloff in feature film production. The slowdown has been a double whammy for crew members, who were hit hard by the fallout from the 100-day writers strike last year.

Hope Parrish, a property master, says she hasn't worked in eight months, the longest stretch in her 29 years in the business. "Nobody is starting any projects,'' said Parrish, who worked on "The Curious Case of Benjamin Button." "I would like to see the producers negotiate a good deal with the actors so we can get back to work."

Many of the protestors belong to the International Alliance of Theatrical Stage Employees, which is grappling with its own contract issues with the studios. IATSE members are about to vote on a controversial contract that includes widely unpopular cuts in health benefits, including extending the number of hours members have to work to keep their health insurance benefits.

Also joining the rally were about 50 supporters from the Membership First faction at SAG, who've been at war with the union's board members over the firing of former executive director Doug Allen. Membership First fears the new negotiating team will capitulate to the studios, short-changing what actors earn from shows distributed on the Internet. In that spirit, they carried signs declaring, "SAG Board Sells Us Out Again" and "Vote No on Contract."

--Richard Verrier

So, here's a new twist on movie promotions.

20th Century Fox has produced a three-part trailer to promote its big-budget summer release "X-Men Orgins: Wolverine" that will run as separate 60-second spots beginning Sunday on the studio's TV shows "Family Guy," "House" and "American Idol."

Immediately after Tuesday's broadcast of the final "Wolverine" spot on "Idol," all three trailers — which together form a narrative — will appear on Yahoo.

The fourth "X-Men" movie, which debuts in theaters May 1, is one of this summer's most highly anticipated releases. The spinoff of the three earlier films, which have generated a total of $1.2 billion in worldwide ticket sales, traces the origins and transformation of the the mutant played by the humanly handsome Hugh Jackman into Wolverine. The studio is billing it as the first chapter in the X-Man saga that unites Wolverine with other legends in the X-Men character "universe."

Fox says the fourth installment of the Marvel Comics movie cost about $100 million. That would be considerably less than the cost of the 2006 sequel "X-Men: The Last Stand," which reportedly carried a price tag of more than $200 million. Why cheaper? For one, Jackman is the only major star in this "prequel." And Halle Berry, who appeared in the first three films, doesn't have a role. Nor was "Wolverine" directed by Brett Ratner, who made the last film, but rather Gavin Hood, who won the 2006 best foreign film Oscar for the low-budget crime drama "Tsotsi" and has never handled a big franchise picture.

— Claudia Eller

Photos from "Wolverine" courtesy of Fox

News Corp. Chief Executive Rupert Murdoch (above right) is in Los Angeles this week and next week to meet with top Fox executives on the West Coast.

Murdoch's presence, and his scrutiny of the company's entertainment businesses, has prompted increased speculation that Peter Chernin (above left), president and chief operating officer of News Corp., actually might be leaving the company after 20 years.  Chernin's contract expires in June.  Chernin has been particularly tight-lipped about his plans, fueling anxiety among Fox executives who want to keep Chernin, who is admired by both Wall Street and Hollywood power players.

Chernin declined to comment.

Murdoch flew into Los Angeles from Australia this week after celebrating the 100th birthday of his mother, Dame Elisabeth Murdoch, along with about 600 friends. The 77-year-old Murdoch is fond of saying that his mum's longevity bodes well for his own prospects of remaining at the helm of News Corp. for many more years.

Succession issues have bedeviled the company because Murdoch wants one of his children (he has six) to eventually run the global media empire that includes the 20th Century Fox film studio, Fox Broadcasting network, cable television outlets that include Fox News Channel, social network MySpace and a string of newspapers that includes his recently acquired jewel, The Wall Street Journal. 

Some on Wall Street worry that Murdoch's kids are not ready to manage the sprawling businesses that generated $33 billion in revenue last fiscal year. What's more, it would be a particularly awkward time for a major executive transition because the recession has hammered media companies that depend on advertising and consumer spending for such non-essential purchases as DVDs.

Last week, News Corp. reported a $6.4-billion loss for the quarter ended Dec. 31. Its stock is down 65% from a 52-week high of $20.49. 

During a conference call with analysts to discuss the results, Chernin seemed to play a less prominent role than he has in the past. Murdoch dominated the session, fielding questions about the entertainment properties that have long been Chernin's specialty.

Then there was the sticky issue of Chernin's contract.

Back during November's earnings call, when Murdoch and Chernin were asked to characterize the negotiations, Chernin called them "constructive." Murdoch quickly jumped in:  "I would characterize them as constructive and friendly."

But last week, the same question prompted a more measured response. "Peter and I are continuing our conversations and they're private and that is all there is to it," Murdoch said.  "Nothing more for me to say and we won't take any further questions on that. It is a confidential matter."

Chernin remained silent.

Murdoch's tour through Los Angeles is part of a strategic review of the company's businesses that takes place every three years, say people familiar with the situation who did not want to be identified in discussing the sensitive subject. Murdoch will hold two more weeks of meetings with top Fox executives this month in New York.

If Chernin were to leave News Corp., he would be available to step into the top job at any number of troubled media companies, of which there appears to be no shortage.

People close to Chernin said it would be hasty to draw a conclusion about Chernin's tenure and Murdoch's visit (the CEO comes here more often than people think, they said). Chernin, 57, has been known to take his employment negotiations down to the wire.  His last contract renewal, in July 2004, was announced three days before the new agreement went into effect.

— Dawn C. Chmielewski and Meg James   

Photo: Daniel Acker/Bloomberg News

Billionaire Sumner Redstone, who has been under pressure to restructure his family company's $1.6 billion in debt, said this morning that "substantial progress" had been made in talks with banks.

"An agreement is now within reach," the 85-year-old Redstone said during a conference call to discuss Viacom Inc.'s  quarterly earnings.

In October, Redstone got caught in the stock-market avalanche, which created a credit crisis for the mogul, who owns controlling stakes in Viacom -- which owns MTV, Nickelodeon, Comedy Central and Paramount Pictures movie studio -- and television and radio broadcasting behemoth CBS Corp.

His family company, National Amusements Inc., was forced to sell non-voting shares in Viacom and CBS at record-low prices to come up with cash to satisfy bankers after National Amusements defaulted on bank loans.   Since late last fall, National Amusements -- led by Redstone's daughter, Shari Redstone -- has been working closely with banks to restructure the company's debt. 

A December deadline for National Amusements to repay $800 million in bank loans was extended into this year, a signal that the elder Redstone might be able to pull off his high-wire credit act and save his media empire. In December, National Amusements jettisoned its ailing video-game company and said that it would sell some of its movie theaters to pay down debt.

Redstone did not say when he expected an agreement would be reached, and he declined to answer questions.  However, two people close to National Amusements said this week that a deal could come within the the next few weeks.

-- Meg James

DreamWorks Animation Chief Executive Jeffrey Katzenberg made a mea culpa on Wednesday, saying that the Motion Picture & Television Fund had done a poor job of communicating the reasons for its decision to close the hospital and nursing home.

"We give ourselves a failing grade,"  said Katzenberg, who chairs the charity's fundraising board. "This has not been communicated well."

But Katzenberg and other board members stood by their decision, describing it as a necessary move to preserve the viability of the organization and its various other programs, which includes six healthcare centers, child care services and a retirement community in Woodland Hills with 215 residents.

"We have made a decision that allows this incredibly important enterprise to live on and have a great future," he said during a conference call with reporters, aimed at quelling fury among the residents' family members who are angry over the facility's closure.

David Tillman, the fund's CEO, said there was a $20-million gap between program revenues and the cost of services that was projected to widen because of rising medical costs and declining reimbursements from the government. In the past, he said, the fund could rely on investment income and philanthropy to make up the shortfall, but that option is no longer possible because of the deep recession.

Frank Mancuso, chairman of the fund's corporate board, said that the board had already taken various steps to stem losses, including closing the hospital's costly intensive care unit, but had run out of options. "We left no stone unturned," he said.

-- Richard Verrier

While several of Hollywood's financially strained independent production companies have either gone under or drastically scaled back operations over the past year, Fred Smith -- the founder and chief executive of FedEx Corp. -- says he's still committed to his side business: investing in movies.

For more than a decade, the Hollywood outsider who lives in Memphis, Tenn., has quietly bankrolled Alcon Entertainment, the boutique production outfit behind such films as "My Dog Skip" and "The Sisterhood of the Traveling Pants" series. His company may not be known for any blockbuster success and has had some box-office losers like the romantic comedy "Chasing Liberty" and its debut movie, "Lost & Found." But Smith claims that, thanks to solid performers such as the romantic drama "P.S. I Love You," starring Hilary Swank and Gerald Butler, and continued financial discipline, Alcon has been a profitable venture.

He attributes the company's stamina in what he readily acknowledges is "a very tough business" to the cost-conscious "no-limos" philosophy guiding Alcon's two chief executives, Andrew Kosove and Broderick Johnson. Despite being a Yalie, Smith hired the two Princeton alums after meeting them in 1994 and being impressed with their 220-page business plan for launching a movie company.

Smith said the duo's success lies in the fact that the pair has stuck to their original strategy for lowering risks inherent to the unpredictable movie business: Keep film budgets tight and overhead low; focus on specific genres like family films; and have a strong studio partner to help market and distribute the pictures (Alcon has a multi-year distribution deal with Warner Bros. and typically sells off the international rights in its films to help finance them).

"Those three things have proven that we're the exception to the rule," Smith said when he dropped by The Times to talk about the toll that the bad economy is taking on his main business --delivering packages.

Smith ducked a question about how much of his own money he's invested in the movie business. "It's mostly been done with borrowed money," he says, noting Alcon's good fortune last year in securing a $500-million bank loan before those kind of "slate-financing" deals dried up. Smith says he used his own FedEx stock to secure the loan.

The entrepreneur, who leaves the day-to-day running of Alcon to his two movie chiefs, says he reads the occasional script and rarely visits the set of his company's movies.

His personal Alcon favorite? Smith says its Jay Russell's family movie, "My Dog Skip," based on Willie Morris' World War II memoir about a boy and his dog growing up in a small Southern town. Made for $7 million, the 2000 release grossed $35 million at the worldwide box office and did well on video. Smith said he defies anyone to watch the movie "without a tear in their eye."

Smith insists he doesn't regret his own failings as a would-be movie star. He jokes that any ambitions he may have harbored were "left on the cutting-room floor" when his three-minute cameo in Fox's 2000 "Cast Away," starring Tom Hanks as a FedEx executive in a modern-day version of Robinson Crusoe, was "so bad, so atrocious, it was cut to 18 seconds."

--Claudia Eller

Steven Spielberg's DreamWorks finalized a distribution deal with Disney today, giving the filmmaker key financial demands he failed to extract from his longtime studio alley Universal Pictures: a commitment to risk hundreds of millions in film prints and advertising costs and to share its valuable pay TV slots.

As part of the deal, Disney will also give DreamWorks -- which has been struggling to raise money for its new studio -- a cash advance of about $100 million and a potential $75-million credit line which Spielberg & Co. can draw on for future productions. Disney's total outlay of $175 million is taking the form of a loan and is not an equity investment.

But, here's the catch. While DreamWorks desperately needs the cash advance to get its slate of movies rolling, it can't access Disney's money until it raises the first phase of its debt financing -- $325 million -- which will trigger a matching equity investment by Spielberg's new studio partner India's Reliance Entertainment.

"Disney has given us all the support we need to be in a position to raise our money and launch our company," said Stacey Snider, partner and chief executive of DreamWorks.

DreamWorks initially hoped to close its bank financing by the the end of the first quarter, but that now appears to be unlikely. A person close to the matter said that a more realistic time frame is late April.

Spielberg and Reliance will continue to fund overhead at DreamWorks, which employs about 60 people, until the deal is completed.

Disney's distribution agreement calls for DreamWorks to deliver up to 30 movies over the term of the deal. DreamWorks hopes to make up to six films a year for Disney's Touchstone Films banner. The first release -- yet to be identified -- will be in 2010.

Disney will market and release the movies worldwide everywhere except India, where Mumbai-based Reliance retains the distribution rights.

The Burbank studio will advance all the prints and advertising costs in exchange for collecting a distribution fee of what could amount to as much as 10%.

DreamWorks will also be able to piggyback on Disney's pay cable deal with Starz Entertainment, which provides movie producers with a significant revenue stream worth hundreds of millions of dollars. Last year, DreamWorks had failed at an attempt to secure its own pay-TV deal with HBO.

Spielberg hooked up with Reliance last year in a 50-50 venture to relaunch DreamWorks as a new studio with hoped-for funding of $1.25 billion. Reliance agreed to match in equity what DreamWorks raises in debt, but those efforts have been greatly hampered by the global credit crisis.

Surprising news of a pending deal between DreamWorks and Disney came late last week after a previously announced agreement between the Spielberg studio and Universal Pictures fell apart. Last fall, Universal had beat Disney and other potential distributors to the punch by cinching the right to distribute DreamWorks new movies. But, as DreamWorks' attempts to raise all of its funding by early this year became derailed by the financial markets, Spielberg and Reliance put pressure on Universal to change the original terms of its distribution deal.

Among sticking points between Universal and DreamWorks was that Universal refused to put up hundreds of millions in funds for prints and ads of DreamWorks movies -- an extremely risky investment in the volatile film business. DreamWorks also wanted more movie slots from Universal's deal with HBO than the studio was able to provide.

-- Claudia Eller

Left photo: Steven Spielberg. Credit: Hector Mata / AFP

Right photo: Stacey Snider. Credit: Vince Bucci / Getty Images

Think of it as a repeat of the swearing-in of President Obama in "an excess of prudence."

The Screen Actors Guild board voted for a second time to oust former executive director Doug Allen and replace the union's negotiating committee with a newly appointed task force dominated by moderates.

The move was widely anticipated, given that the board had previously taken such a vote last month by means of a "written assent."

That action, however, was challenged in a lawsuit filed last week by SAG President Alan Rosenberg and three other directors. Rosenberg has been a staunch ally of Allen and had refused to accept the board's appointment of David White as interim executive director and John McGuire as SAG's new chief negotiator. Last week, a judge denied a request for a temporary restraining order, saying the board had acted within its rights.

Sunday's vote -- supported by 59% of the 71-member board -- delivers a further blow to Rosenberg's legal challenge, which had threatened to delay a resumption in long-stalled contract negotiations with the studios. Talks are expected to resume on Feb. 17.

-- Richard Verrier

DreamWorks' planned distribution deal with Universal Pictures has collapsed as the parties are unable to agree upon final terms.

The failure of the agreement paves the way for Walt Disney Studios, which had earlier sought a distribution deal with DreamWorks, to step in as Steven Spielberg's new studio home, according to people familiar with the situation.

DreamWorks has been struggling for months to raise funds for its new studio, but efforts to raise the debt portion of its desired $1.25 billion in financing has been hampered by the global credit crisis.

DreamWorks, which split from former owner Paramount Pictures last year, is in need of some serious cash to continue financing overhead and jump-start plans to make about six movies a year. Spielberg's businesss partner, India's Reliance Entertainment, will not put up the equity portion of the financing until DreamWorks secures a matching sum in debt. DreamWorks' lead bank, JPMorgan Chase, so far has received a commitment for less than half of the $325-million loan that Spielberg hopes to have by late March. At that point, Reliance would match the bank contribution. DreamWorks is seeking to raise a total of about $1.25 billion in equity and debt.

Reliance had been pressuring Universal to advance DreamWorks at least $150 million in interim financing. But Universal, which in October announced a multi-year distribution deal with DreamWorks, balked and this morning announced it had halted talks with DreamWorks. "Over the past several weeks DreamWorks has demanded material changes to previously agreed-upon terms. It is clear DreamWorks' needs and Universal's business interests are no longer in alignment," Universal said.

Disney, which had been one of several DreamWorks distribution suitors, is in talks with the Spielberg camp and apparently willing to step in and make the investment needed by the filmmaker. Disney has always been Plan B, although Spielberg's first choice was Universal, where he began his career. Spielberg's creative partner Stacey Snider, who runs DreamWorks, used to be chairwoman of Universal Pictures.

This is the second time that Universal let DreamWorks slip away over money issues. Before being sold to Paramount in 2006 for $1.6 billion, DreamWorks had been in serious negotiations with Universal. But at the eleventh hour, Universal lowered its acquisition offer and the deal fell apart.

-- Claudia Eller

UPDATED at 4:59 p.m.:  With a judge having denied a temporary restraining order sought by Screen Actors Guild President Alan Rosenberg, the major studios are expected  to resume contract negotiations with the union. Talks have been tentatively scheduled for Feb. 17 and 18, sources familiar with the talks say.

A judge rebuffed for the second time a bid by Screen Actors Guild President Alan Rosenberg to block the union's new negotiating team from reviving contract talks with the major studios.

Rosenberg and three other board members filed a lawsuit this week seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee. They maintained the vote, taken by means of a "written assent," violated the state's business laws and the union's own bylaws.

But Los Angeles Superior Court Judge James Chalfant denied the request for a temporary restraining order, ruling that the board's action complied with the state law governing corporations. He also rejected arguments by Rosenberg's attorneys that a two-third vote was required to disband the committee.

The judge's decision removes what would have been an embarrassing setback for SAG. A restraining order could have unseated the union's newly appointed interim executive director and chief negotiator. They were tapped by the board after it fired former Executive Director Doug Allen, contending he mishandled negotiations.

Nonetheless, Thursday's ruling, which didn't dismiss the overall case, doesn't end the uncertainty over when contract negotiations with the studios will resume. Actors have been without a contract since June 30, 2008. SAG postponed planned negotiating sessions earlier this week because of the fight with its union president. 

And it's unlikely studios would agree to return to the bargaining table as long as there is a pending lawsuit challenging the legitimacy of negotiations.

Eric George, attorney for Rosenberg and the other directors, said he would file an appeal in the next few days with the California Court of Appeal.

Ned Vaughn, spokesman for the Unite for Strength group that represents so-called moderate board members, hailed the judge's ruling and called on Rosenberg to drop his complaint.

"It's outrageous that this lawsuit has further delayed negotiations,'' he said. "It's time for Alan Rosenberg to drop this and accept that SAG members voted for change. They want it now."

Rosenberg, who attended Thursday's hearing, declined to comment.

Thursday's ruling marked a second setback for Rosenberg, whose initial appeal for an injunction was denied after the judge cited several technical errors in the complaint.

“I’m pleased that we can put this matter behind us and dedicate our complete focus to the needs of Screen Actors Guild members. There’s a lot of work ahead of us,” said SAG interim National Executive Director David White.

-- Richard Verrier

Is French media giant Vivendi souring on its investment in NBC Universal -- perhaps un petit peu?

Mais non, says Vivendi Chief Executive Jean-Bernard Levy.

Nonetheless, Vivendi plans to write down the value of its 20% stake in NBC Universal next month when the French company reports its quarterly earnings. For now, Vivendi won't discuss the amount of the anticipated noncash charge, which is necessary to reflect the lower valuation of the U.S. company that boasts the NBC broadcast network, cable channels USA Network, Bravo and MSNBC, and Universal Studios. 

General Electric Co., whose stock has been pummeled in the market meltdown, owns the controlling 80% of NBC Universal. When GE and Vivendi combined their entertainment properties in 2004 to create NBC Universal, the enterprise was valued at more than $40 billion, making Vivendi's portion worth around $8 billion. (GE reiterated Tuesday that it had no plans to reduce the value of NBC that it carries on its battered books.) 

"It's a tough environment, but we are very pleased with NBC," Levy said during an interview in Santa Monica. "We are pleased with the profits that NBC has achieved; the overall performance of NBC U has been very good." 

Vivendi had an opportunity in December to divest its stake in NBC Universal  -- but it chose not to. The timing was not right because of the U.S. media company's depressed trading multiples, Levy said. Vivendi intends to hang on to its interest until the market bounces back.

How long will Vivendi be part of the peacock company? Levy would not tip his hand other than to say, "We are not long-term owners." He added that his company prefers to be in the "driver's seat" of its investments, and that is not the case with NBC.

Still, Levy is a big fan of the guy behind the wheel, NBC Universal CEO Jeff Zucker.

"I like him very much, he is an excellent manager and he certainly knows his business," Levy said of Zucker. The two CEOs spent time together last weekend in Tampa, where they attended the Super Bowl, which was televised by NBC and generated huge ratings.

Levy now is expecting Zucker to make similar gains in the financial field. "We are happy that we will share in the potential value creation that he and his team will implement," Levy said.

-- Meg James

Photo of Vivendi CEO Jean-Bernard Levy by Alex Pham/Los Angeles Times

A judge on Tuesday denied a temporary restraining order sought by SAG President Alan Rosenberg to block negotiations between the union and the major studios.

Rosenberg and three other board members are seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee, contending that the action violated the state's corporate code.

But Los Angeles Superior Court Judge James Chalfant denied the request for an injunction, citing several technical errors in the lawsuit, and ordered that the complaint be resubmitted. A hearing on the case will be held Thursday. The litigation has delayed contract negotiations that were set to resume this week.

"They are so desperate to hold on to their power that they are willing to burn down their own house,'' said New York SAG President Sam Freed, one of the board members being sued. Rosenberg declined to comment.

-- Richard Verrier

Financial news network Bloomberg Television today pulled the plug on its "Night Talk" program and bid goodbye to longtime anchor Mike Schneider.

Schneider's last program was Monday night.

Additional staff cuts and TV programming lineup changes are expected to be announced Wednesday. The moves are part of broad restructuring of the multimedia group, which includes Bloomberg Television and Bloomberg Radio, a person familiar with the situation said.

The private company, founded by New York Mayor Michael Bloomberg, generates about $6 billion a year in revenue.

But the shuffle has already begun. Bloomberg Television Managing Editor John Meehan left the company last week. His departure comes four months after former NBC, CBS and Sony BMG Music executive Andy Lack was hired to manage Bloomberg's television and radio operations. Lack brought in David Rhodes from the Fox News Channel to run the television operations.

Bloomberg operates 24 hours a day and has TV channels in 11 countries, but its sprawling operations are seen as disjointed and not making full use of its team of reporters in 143 bureaus around the world.

Although the company plans to eliminate programs and trim employees, it plans to hire additional staff this year to improve its programming to better position the company for growth, said the person familiar with the situation.

"While other news organizations are shrinking, we continue to expand, improving our existing products while investing in new ones," Bloomberg Chairman Peter Grauer said in a statement in October when Lack was hired.

-- Meg James

Summit Entertainment and Lionsgate aren't getting hitched. At least not yet, if ever.

The idea has been broached, according to insiders, but nothing is cooking. Such a corporate marriage, were it to happen, would unite a suddenly hot movie production company with Hollywood's leading independent movie and TV studio, which is behind the "Saw" and "Tyler Perry" franchises.

So far, however, Summit has played hard to get.

A few weeks before the late November release of Summit's box office smash "Twilight," the company headed by Patrick Wachsberger and Rob Friedman, was approached by Lionsgate about a potential merger. Lionsgate, well aware of the teen vampire film's hot pre-release buzz, made an offer for Summit but was rebuffed because the price was too low.

Lionsgate and Summit, which are located right around the corner from each other in Santa Monica, say privately that there have been no formal talks since last fall. That's not to say that Lionsgate Chief Executive Jon Feltheimer and Summit's Friedman, who are golfing buddies, would never discuss it between rounds. Who knows?

After all, "Twilight," which was made for $37 million and grossed $341 million worldwide, is a highly prized new movie franchise, one that would fit nicely with Lionsgate's strategy of producing moderately budgeted movies targeted at a specific audience. The sequel, "New Moon," based on the second novel of author Stephenie Meyer's popular four-book series, is due in theaters Nov. 25 of this year. The first film's director, Catherine Hardwicke, dropped out for the next installment and was replaced by Chris Weitz, whose previous credits include "The Golden Compass" and "About a Boy."

"Twilight" put the nearly 2-year-old Summit on the Hollywood map. The start-up's first five releases included such box office flops as "Penelope," "Fly Me to the Moon" and "Sex Drive." Next up for the production and international sales company is "Push," a supernatural thriller with Dakota Fanning that opens Friday, and "Knowing," a mystery thriller starring Nicolas Cage, on March 20.

--Claudia Eller

Photos: Rob Friedman, left (Kevin Winter/Getty Images) and Jon Feltheimer (Vince Bucci/Getty Images)

To virtually no one's surprise, the Screen Actors Guild and the major studios announced late Wednesday that they will return to the negotiating table Tuesday to try to forge a new contract for actors.

The move comes only two days after SAG's board hired a new negotiator, John McGuire, and a new interim executive director, David White, following the ouster of Doug Allen. At the same time, the board formed a new "task force" to replace the previous negotating committee.

Moderates who orchestrated the shake-up are expected to move quickly to finalize a new contract, which will be modeled on deals secured over the past year by three other talent unions. Their challenge will be to obtain improvements over the studios' previous "final offer" that will be acceptable to members and demonstrate that the leadership didn't capitulate under pressure.

SAG members have been working without a contract since June 30.

-- Richard Verrier

Twentieth Century Fox has agreed to co-finance the third movie in the “Chronicles of Narnia” series, pending approval of the final script and shooting budget. If all goes as planned, Fox and Walden Media, which controls the movie rights to C.S. Lewis’ classic children's books, hope to begin production on "The Voyage of the Dawn Treader" by late summer so it will be ready for holiday 2010 release.

First, however, Fox and Walden have to hire a screenwriter to do another pass on the script that was last rewritten by Richard LaGravenese, whose credits include "Freedom Writers" and "The Horse Whisperer." The movie companies are looking to make the film for about $140 million. Michael Apted, who made "Amazing Grace" and the 1999 Bond flick "The World Is Not Enough," is on board to direct.

Fox is taking a financial gamble that Disney was unwilling to wage despite helping bankroll the first two films in the "Narnia" family franchise. Walden, owned by entrepreneur Phil Anschutz, was forced to seek a new financial partner on “Dawn Treader” after Disney balked at the cost and opted out.

Fox was the most likely partner because the studio already markets and distributes Walden movies under its Fox Walden label.

Over the last few weeks, Walden chief David Weil and “Narnia” producer Mark Johnson have held a series of meetings with top Fox executives, including movie chiefs Tom Rothman and Jim Gianopulos, to discuss script revisions and the movie's cost.

While the targeted budget of “Dawn Treader” is much lower than that of the last Narnia movie, “Prince Caspian,” which cost $225 million to produce, it's still a big gamble. Released by Disney last year, the sequel was much less popular than the first "Narnia" movie, “The Lion, the Witch and the Wardrobe.” The sequel grossed $419 million worldwide compared with its 2005 predecessor, which generated $745 million in ticket sales.

Disney and Walden hope that DVD sales of "Prince Caspian" will help pull the movie out of the red.

-- Claudia Eller

Photo: "The Chronicles of Narnia: Prince Caspian" is courtesy of Walt Disney Studios

Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.

The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies. 

A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.

A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Carl Icahn's roar for Lions Gate grows louder

Activist shareholder Carl Icahn is tightening his grip on Lions Gate Entertainment, revealing for the first time that he may seek board seats to increase his influence over the company’s Santa Monica movie and TV studio, according to a recent regulatory filing.

There is speculation that Icahn, who just upped his stake to 14.3%, will look to put son Brett on the board. The 29-year-old, who works closely with his father at Icahn Partners, has been the point person between the investment firm and the management of Lions Gate led by Chief Executive Jon Feltheimer and Vice Chairman Michael Burns.

Although the two executives have so far had a good working relationship with Icahn, according to a person close to the investor, the billionaire is also known to push for changes if a company continues to stumble badly. Lionsgate stock recently posted poor fiscal third-quarter results due to the weak performance of its movies. That said, over the weekend, the studio had the top-grossing movie at the box office when “Tyler Perry’s Madea Goes to Jail” debuted with $41 million in ticket sales.

In a filing with the Securities and Exchange Commission this week, Icahn said he may seek to add members to Lions Gate’s board either by expanding the board or by “removing individuals." He also said that such an action could occur at Lions Gate’s next annual shareholders meeting, typically the second week of September, or  a “special" meeting could be called earlier.

Brett’s name first emerged in a story this morning posted online by the New York Post.

In a brief phone interview Wednesday, Brett Icahn declined to comment on any moves that his father is making on Lions Gate, including whether he will request a board seat. He acknowledged that the Icahns are in close contact with  Feltheimer and Burns. “Absolutely, we’ve talked to management before,” he said.

-- Claudia Eller

Photo: Mark Lennihan/Associated Press

Rupert Murdoch issued the following memo to News Corp. employees to announce that Peter Chernin would not be renewing his contract:

February 23, 2009

Dear Colleagues:

Today, we are announcing that Peter Chernin, our President and COO, will not be renewing his employment contract. Peter will be taking up the opportunity to start a new motion picture and television production venture with Fox.

Many of us who have worked with Peter over his 20 years with the company can attest to his leadership, his diligence, and his wisdom. I can also testify to Peter’s friendship, dedication, and honesty. He has been a close colleague and an ally to me for many years.

While Peter has distinguished himself at News Corp, he has also, increasingly and tirelessly, circled the globe in support of Malaria No More, which has achieved nothing short of remarkable results. Let us all wish him the best of luck, and the greatest success, as he embarks on this new chapter of his career, both as a professional and as a role model for an executive who gives back.

As you all know the downturn we are operating in is more severe and global than anything we have seen before. No company is immune to its effects. I want to take this opportunity, today, to write to you about how we will manage such an important leadership transition, and why I am convinced that today our company is not only well-positioned financially and competitively, but is on the cusp of a new phase of growth. Remember, we began priming ourselves for a weakening economy over a year ago. We have managed expenses and capital expenditure prudently, and strengthened our balance sheet. Following the partial sale of NDS, we will have over five billion dollars in cash, and this year we should exceed $3.5 billion in adjusted operating income.

Peter Chernin, president and chief operating officer of News Corp., just sent out a companywide memo confirming he is leaving the company when his contract expires in June:

I wanted to let you know that I have decided to leave News Corporation when my contract expires on June 30th.

This is not a decision that came easily, but after more than 12 years in my current job, 20 years at Newscorp, and 30 years of corporate life, I am ready for new entrepreneurial challenges. I would not be making this difficult decision if I were not confident in the superb management team we have at Fox and in the visionary leadership of Rupert Murdoch. I have worked closely with Rupert every day, and I know he shares my belief that Fox executives are the best in the business.

I want to thank Rupert for his remarkable support, encouragement and friendship over the years. No company in our industry can match News Corporation's track record of creating opportunities for employees and there is no better example of that than the opportunities Rupert has given me over the years.

I also want to thank all of you for the privilege of working side by side with such a talented and deeply principled group of colleagues. I am not only deeply proud of your achievements, but even prouder of the character and integrity of the company.

Over the next several months, Rupert and I will work closely to make sure this is a smooth transition for everyone. Thank you for the dedication and enthusiasm that you have always shown and I know will continue to show as the company moves forward to even greater heights.

Peter Chernin

In this Aug. 5, 2008 file photo, Peter Chernin, president & COO of News Corp., is seen on the floor of the New York Stock Exchange. News Corp. on Monday, Feb. 23, 2009 said Chernin will leave the company in June. (AP Photo/Richard Drew, file)

The board of the Screen Actors Guild, as expected, rejected the "final offer" by the Hollywood studios for a new contract covering the union's 120,000 members, creating fresh uncertainty about whether and when the seven-month labor dispute will end.

The rejection was widely anticipated because the studios' proposal contained a provision that SAG negotiators viewed as a non-starter.  Nonetheless, the move is likely to deepen anxiety in the movie industry, where production activity has already slowed.

The studios and SAG appeared close to striking a deal earlier this week after the union's negotiators made what they said were key concessions, including accepting a framework for how actors will be paid for their work in content distributed on the Internet. That framework is modeled upon terms agreed to by three other Hollywood talent guilds.

But SAG negotiators balked at the studios' demand that the union's contract expire in three years, rather than two years. Studio executives insist that a three-year contract is necessary to ensure stability. A three-year deal, however, would mean SAG's contract would expire a year later than the labor contracts of the American Federation of Television and Radio Artists, and the writers and directors guilds.  SAG leaders believe that would weaken their bargaining clout by preventing them from joining forces with the other unions in the next round of contract negotiations.

In a statement, SAG accused the studios of inserting a "last-minute and surprise demand" that was not brought up in earlier negotiations, including during federal mediation talks in November.

"By attempting to extend our contract expiration one year beyond the other entertainment unions, the AMPTP (Alliance of Motion Picture and Television Producers) intends to de-leverage our bargaining position from this point forward. ... The AMPTP has clearly stated their need and desire for financial certainty and industry peace.  This new proposal does the exact opposite, and will only result in constant negotiating cycles and continued labor unrest."

The AMPTP responded that its offer was “strong and fair” and that it had always sought a three year deal with SAG. "We have kept our offer on the table -- and even enhanced it -- despite the historically unprecedented economic crisis that has clobbered our nation and our industry." 

SAG's board stopped short of asking union members to approve a strike, fearing that the deep recession makes this the wrong time for such action. People close to the union, who did not want to be identified because they were not authorized to speak on the record, say the next logical step for SAG representatives is to initiate back-channel contacts with some senior studio executives to see if a showdown can be averted (typically, negotiations are conducted through the studios' negotiating arm, the Alliance of Motion Picture and Television Producers).

Meanwhile, SAG is preparing to begin negotiations Monday with producers of commercials, which are covered under a separate contract.

-- Richard Verrier

 

UPDATE: Disney says the reorganization will also create one group to identify "development opportunities" for the parks, not "acquisitions." The previous information was based on a statement erroneously provided by the company.

The Walt Disney Co. has announced a broad restructuring of its parks and resorts operation -- a move that sets the stage for more job cuts in the coming weeks.

The large-scale reorganization, which encompasses Disneyland, Disney World, cruise ships and resorts that it runs in places like Hilton Head, S.C., comes on the heels of last month's buyout package offers to 600 parks executives.

"These changes are essential to maintaining our leadership position in family tourism and reflect today's economic realities," Jay Rasulo, Parks chairman, said a statement.

Under the new structure, facets of Disneyland and Walt Disney World will be consolidated into a single domestic operation, to be headed by Worldwide Operations President Al Weiss.

Rasulo said the company would streamline its operating structure to simplify the operations -- and in the process, reduce overhead. He said the reorganization was a further step in an operational review begun in 2005 at Walt Disney Parks and Resorts, although he acknowledged that the bleak economy has accelerated the pace of the changes.

Disneyland Resort President Ed Grier and Walt Disney World Resort President Meg Crofton will continue to oversee the ride operations and other facets of customer attendance. However, Weiss' group will take over functions that cut across parks, such as procurement, menu planning and ordering stuffed animals.

The operations of Walt Disney Imagineering group will also be simplified. Chief Creative Executive Bruce Vaughn and Chief Design and Project Delivery Executive Craig Russell will continue to oversee the development of attractions for all Disney parks and resorts. But the group will no longer have separate groups devoted to development for resorts, entertainment and attractions.

A new global business development team will combine real estate development and business development under Executive Vice President Nick Franklin.

The changes are intended to streamline the organization and create one group that identifies possible acquisitions and park expansions, another that implements it and a third that is in charge of operations, company officials said.

The restructuring probably will result in job cuts, on top of the buyouts offered in January. It's unclear how many positions will be lost.

"Organization changes require difficult decisions, including the elimination of some roles," Rasulo said. "These decisions were not made lightly and we know this will be a challenging transition. The people affected are our friends and colleagues"

--Dawn C. Chmielewski

Photo credit: Timothy O'Rourke / Bloomberg News

CBS Corp., seeking to stave off a cash crunch and a downgrade its credit rating, slashed its dividend by more than 80% to 5 cents a share from 27 cents.

The broadcasting giant, releasing fourth-quarter results after the market closed, said net income plunged 52% to $136.1 million from $286.2 million in a year earlier.

Revenue was down a more modest 6% to $3.5 billion for the quarter compared with nearly $3.76 billion for the same period in 2007. The company attributed the lower top line to advertising weakness, partially offset by higher affiliate revenue from Internet media company CNet.

The dividend cut was even larger than Wall Street analysts had been expecting.

Chief Executive Leslie Moonves explained the reduction by pointing out that CBS had long been generous with its cash to investors but the economy now required the company to adjust its policy.

"CBS continues to produce strong cash flow, and we have returned $5.5 billion of that cash to shareholders in just three years as a stand-alone company," Moonves said. "However, by taking this step now, we will further strengthen our financial flexibility to meet our debt obligations even in difficult credit markets, and still provide our shareholders with an attractive dividend.”

Said CBS Executive Chairman Sumner Redstone, “We are clearly in the midst of one of the most difficult financial environments in history, with very little visibility on how long these economic conditions will continue or if there is worse to come."

Moonves, in a conference call with analysts, declined to give much guidance on the current first and upcoming second quarters. But he said he expected the second half of the year to be stronger for the company because CBS will have rerun revenue from the syndication of five TV shows "hitting the books" this fall.

-- Meg James

As the Screen Actors Guild and the major studios resumed contract negotiations today, Hollywood's below-the-line laborers wanted to deliver a message: "Let's get back to work."

About 100 film and TV workers, including cinematographers, studio drivers, makeup artists and prop makers, staged a rally this morning outside the Sherman Oaks headquarters of the Alliance of Motion Picture and Television Producers -- the negotiating arm of the studios -- urging the parties to "reach a speedy resolution to the current stalemate."

Rally organizers said their purpose was not to take a position on the contract dispute, but to convey a sense of urgency about how the continuing stalemate was creating hardships for entertainment industry workers.

"We decided we needed to be seen physically,'' said Ed Gutentag, a cinematographer and spokesman for the self-described "Let's Get Back to Work" coalition. "We're not taking sides, we just want to send a message that we're suffering by their inability to come up with a deal."

Actors have been working without a contract since June 30, creating an atmosphere of uncertainty that has contributed to a steep falloff in feature film production. The slowdown has been a double whammy for crew members, who were hit hard by the fallout from the 100-day writers strike last year.

Hope Parrish, a property master, says she hasn't worked in eight months, the longest stretch in her 29 years in the business. "Nobody is starting any projects,'' said Parrish, who worked on "The Curious Case of Benjamin Button." "I would like to see the producers negotiate a good deal with the actors so we can get back to work."

Many of the protestors belong to the International Alliance of Theatrical Stage Employees, which is grappling with its own contract issues with the studios. IATSE members are about to vote on a controversial contract that includes widely unpopular cuts in health benefits, including extending the number of hours members have to work to keep their health insurance benefits.

Also joining the rally were about 50 supporters from the Membership First faction at SAG, who've been at war with the union's board members over the firing of former executive director Doug Allen. Membership First fears the new negotiating team will capitulate to the studios, short-changing what actors earn from shows distributed on the Internet. In that spirit, they carried signs declaring, "SAG Board Sells Us Out Again" and "Vote No on Contract."

--Richard Verrier

So, here's a new twist on movie promotions.

20th Century Fox has produced a three-part trailer to promote its big-budget summer release "X-Men Orgins: Wolverine" that will run as separate 60-second spots beginning Sunday on the studio's TV shows "Family Guy," "House" and "American Idol."

Immediately after Tuesday's broadcast of the final "Wolverine" spot on "Idol," all three trailers — which together form a narrative — will appear on Yahoo.

The fourth "X-Men" movie, which debuts in theaters May 1, is one of this summer's most highly anticipated releases. The spinoff of the three earlier films, which have generated a total of $1.2 billion in worldwide ticket sales, traces the origins and transformation of the the mutant played by the humanly handsome Hugh Jackman into Wolverine. The studio is billing it as the first chapter in the X-Man saga that unites Wolverine with other legends in the X-Men character "universe."

Fox says the fourth installment of the Marvel Comics movie cost about $100 million. That would be considerably less than the cost of the 2006 sequel "X-Men: The Last Stand," which reportedly carried a price tag of more than $200 million. Why cheaper? For one, Jackman is the only major star in this "prequel." And Halle Berry, who appeared in the first three films, doesn't have a role. Nor was "Wolverine" directed by Brett Ratner, who made the last film, but rather Gavin Hood, who won the 2006 best foreign film Oscar for the low-budget crime drama "Tsotsi" and has never handled a big franchise picture.

— Claudia Eller

Photos from "Wolverine" courtesy of Fox

News Corp. Chief Executive Rupert Murdoch (above right) is in Los Angeles this week and next week to meet with top Fox executives on the West Coast.

Murdoch's presence, and his scrutiny of the company's entertainment businesses, has prompted increased speculation that Peter Chernin (above left), president and chief operating officer of News Corp., actually might be leaving the company after 20 years.  Chernin's contract expires in June.  Chernin has been particularly tight-lipped about his plans, fueling anxiety among Fox executives who want to keep Chernin, who is admired by both Wall Street and Hollywood power players.

Chernin declined to comment.

Murdoch flew into Los Angeles from Australia this week after celebrating the 100th birthday of his mother, Dame Elisabeth Murdoch, along with about 600 friends. The 77-year-old Murdoch is fond of saying that his mum's longevity bodes well for his own prospects of remaining at the helm of News Corp. for many more years.

Succession issues have bedeviled the company because Murdoch wants one of his children (he has six) to eventually run the global media empire that includes the 20th Century Fox film studio, Fox Broadcasting network, cable television outlets that include Fox News Channel, social network MySpace and a string of newspapers that includes his recently acquired jewel, The Wall Street Journal. 

Some on Wall Street worry that Murdoch's kids are not ready to manage the sprawling businesses that generated $33 billion in revenue last fiscal year. What's more, it would be a particularly awkward time for a major executive transition because the recession has hammered media companies that depend on advertising and consumer spending for such non-essential purchases as DVDs.

Last week, News Corp. reported a $6.4-billion loss for the quarter ended Dec. 31. Its stock is down 65% from a 52-week high of $20.49. 

During a conference call with analysts to discuss the results, Chernin seemed to play a less prominent role than he has in the past. Murdoch dominated the session, fielding questions about the entertainment properties that have long been Chernin's specialty.

Then there was the sticky issue of Chernin's contract.

Back during November's earnings call, when Murdoch and Chernin were asked to characterize the negotiations, Chernin called them "constructive." Murdoch quickly jumped in:  "I would characterize them as constructive and friendly."

But last week, the same question prompted a more measured response. "Peter and I are continuing our conversations and they're private and that is all there is to it," Murdoch said.  "Nothing more for me to say and we won't take any further questions on that. It is a confidential matter."

Chernin remained silent.

Murdoch's tour through Los Angeles is part of a strategic review of the company's businesses that takes place every three years, say people familiar with the situation who did not want to be identified in discussing the sensitive subject. Murdoch will hold two more weeks of meetings with top Fox executives this month in New York.

If Chernin were to leave News Corp., he would be available to step into the top job at any number of troubled media companies, of which there appears to be no shortage.

People close to Chernin said it would be hasty to draw a conclusion about Chernin's tenure and Murdoch's visit (the CEO comes here more often than people think, they said). Chernin, 57, has been known to take his employment negotiations down to the wire.  His last contract renewal, in July 2004, was announced three days before the new agreement went into effect.

— Dawn C. Chmielewski and Meg James   

Photo: Daniel Acker/Bloomberg News

Billionaire Sumner Redstone, who has been under pressure to restructure his family company's $1.6 billion in debt, said this morning that "substantial progress" had been made in talks with banks.

"An agreement is now within reach," the 85-year-old Redstone said during a conference call to discuss Viacom Inc.'s  quarterly earnings.

In October, Redstone got caught in the stock-market avalanche, which created a credit crisis for the mogul, who owns controlling stakes in Viacom -- which owns MTV, Nickelodeon, Comedy Central and Paramount Pictures movie studio -- and television and radio broadcasting behemoth CBS Corp.

His family company, National Amusements Inc., was forced to sell non-voting shares in Viacom and CBS at record-low prices to come up with cash to satisfy bankers after National Amusements defaulted on bank loans.   Since late last fall, National Amusements -- led by Redstone's daughter, Shari Redstone -- has been working closely with banks to restructure the company's debt. 

A December deadline for National Amusements to repay $800 million in bank loans was extended into this year, a signal that the elder Redstone might be able to pull off his high-wire credit act and save his media empire. In December, National Amusements jettisoned its ailing video-game company and said that it would sell some of its movie theaters to pay down debt.

Redstone did not say when he expected an agreement would be reached, and he declined to answer questions.  However, two people close to National Amusements said this week that a deal could come within the the next few weeks.

-- Meg James

DreamWorks Animation Chief Executive Jeffrey Katzenberg made a mea culpa on Wednesday, saying that the Motion Picture & Television Fund had done a poor job of communicating the reasons for its decision to close the hospital and nursing home.

"We give ourselves a failing grade,"  said Katzenberg, who chairs the charity's fundraising board. "This has not been communicated well."

But Katzenberg and other board members stood by their decision, describing it as a necessary move to preserve the viability of the organization and its various other programs, which includes six healthcare centers, child care services and a retirement community in Woodland Hills with 215 residents.

"We have made a decision that allows this incredibly important enterprise to live on and have a great future," he said during a conference call with reporters, aimed at quelling fury among the residents' family members who are angry over the facility's closure.

David Tillman, the fund's CEO, said there was a $20-million gap between program revenues and the cost of services that was projected to widen because of rising medical costs and declining reimbursements from the government. In the past, he said, the fund could rely on investment income and philanthropy to make up the shortfall, but that option is no longer possible because of the deep recession.

Frank Mancuso, chairman of the fund's corporate board, said that the board had already taken various steps to stem losses, including closing the hospital's costly intensive care unit, but had run out of options. "We left no stone unturned," he said.

-- Richard Verrier

While several of Hollywood's financially strained independent production companies have either gone under or drastically scaled back operations over the past year, Fred Smith -- the founder and chief executive of FedEx Corp. -- says he's still committed to his side business: investing in movies.

For more than a decade, the Hollywood outsider who lives in Memphis, Tenn., has quietly bankrolled Alcon Entertainment, the boutique production outfit behind such films as "My Dog Skip" and "The Sisterhood of the Traveling Pants" series. His company may not be known for any blockbuster success and has had some box-office losers like the romantic comedy "Chasing Liberty" and its debut movie, "Lost & Found." But Smith claims that, thanks to solid performers such as the romantic drama "P.S. I Love You," starring Hilary Swank and Gerald Butler, and continued financial discipline, Alcon has been a profitable venture.

He attributes the company's stamina in what he readily acknowledges is "a very tough business" to the cost-conscious "no-limos" philosophy guiding Alcon's two chief executives, Andrew Kosove and Broderick Johnson. Despite being a Yalie, Smith hired the two Princeton alums after meeting them in 1994 and being impressed with their 220-page business plan for launching a movie company.

Smith said the duo's success lies in the fact that the pair has stuck to their original strategy for lowering risks inherent to the unpredictable movie business: Keep film budgets tight and overhead low; focus on specific genres like family films; and have a strong studio partner to help market and distribute the pictures (Alcon has a multi-year distribution deal with Warner Bros. and typically sells off the international rights in its films to help finance them).

"Those three things have proven that we're the exception to the rule," Smith said when he dropped by The Times to talk about the toll that the bad economy is taking on his main business --delivering packages.

Smith ducked a question about how much of his own money he's invested in the movie business. "It's mostly been done with borrowed money," he says, noting Alcon's good fortune last year in securing a $500-million bank loan before those kind of "slate-financing" deals dried up. Smith says he used his own FedEx stock to secure the loan.

The entrepreneur, who leaves the day-to-day running of Alcon to his two movie chiefs, says he reads the occasional script and rarely visits the set of his company's movies.

His personal Alcon favorite? Smith says its Jay Russell's family movie, "My Dog Skip," based on Willie Morris' World War II memoir about a boy and his dog growing up in a small Southern town. Made for $7 million, the 2000 release grossed $35 million at the worldwide box office and did well on video. Smith said he defies anyone to watch the movie "without a tear in their eye."

Smith insists he doesn't regret his own failings as a would-be movie star. He jokes that any ambitions he may have harbored were "left on the cutting-room floor" when his three-minute cameo in Fox's 2000 "Cast Away," starring Tom Hanks as a FedEx executive in a modern-day version of Robinson Crusoe, was "so bad, so atrocious, it was cut to 18 seconds."

--Claudia Eller

Steven Spielberg's DreamWorks finalized a distribution deal with Disney today, giving the filmmaker key financial demands he failed to extract from his longtime studio alley Universal Pictures: a commitment to risk hundreds of millions in film prints and advertising costs and to share its valuable pay TV slots.

As part of the deal, Disney will also give DreamWorks -- which has been struggling to raise money for its new studio -- a cash advance of about $100 million and a potential $75-million credit line which Spielberg & Co. can draw on for future productions. Disney's total outlay of $175 million is taking the form of a loan and is not an equity investment.

But, here's the catch. While DreamWorks desperately needs the cash advance to get its slate of movies rolling, it can't access Disney's money until it raises the first phase of its debt financing -- $325 million -- which will trigger a matching equity investment by Spielberg's new studio partner India's Reliance Entertainment.

"Disney has given us all the support we need to be in a position to raise our money and launch our company," said Stacey Snider, partner and chief executive of DreamWorks.

DreamWorks initially hoped to close its bank financing by the the end of the first quarter, but that now appears to be unlikely. A person close to the matter said that a more realistic time frame is late April.

Spielberg and Reliance will continue to fund overhead at DreamWorks, which employs about 60 people, until the deal is completed.

Disney's distribution agreement calls for DreamWorks to deliver up to 30 movies over the term of the deal. DreamWorks hopes to make up to six films a year for Disney's Touchstone Films banner. The first release -- yet to be identified -- will be in 2010.

Disney will market and release the movies worldwide everywhere except India, where Mumbai-based Reliance retains the distribution rights.

The Burbank studio will advance all the prints and advertising costs in exchange for collecting a distribution fee of what could amount to as much as 10%.

DreamWorks will also be able to piggyback on Disney's pay cable deal with Starz Entertainment, which provides movie producers with a significant revenue stream worth hundreds of millions of dollars. Last year, DreamWorks had failed at an attempt to secure its own pay-TV deal with HBO.

Spielberg hooked up with Reliance last year in a 50-50 venture to relaunch DreamWorks as a new studio with hoped-for funding of $1.25 billion. Reliance agreed to match in equity what DreamWorks raises in debt, but those efforts have been greatly hampered by the global credit crisis.

Surprising news of a pending deal between DreamWorks and Disney came late last week after a previously announced agreement between the Spielberg studio and Universal Pictures fell apart. Last fall, Universal had beat Disney and other potential distributors to the punch by cinching the right to distribute DreamWorks new movies. But, as DreamWorks' attempts to raise all of its funding by early this year became derailed by the financial markets, Spielberg and Reliance put pressure on Universal to change the original terms of its distribution deal.

Among sticking points between Universal and DreamWorks was that Universal refused to put up hundreds of millions in funds for prints and ads of DreamWorks movies -- an extremely risky investment in the volatile film business. DreamWorks also wanted more movie slots from Universal's deal with HBO than the studio was able to provide.

-- Claudia Eller

Left photo: Steven Spielberg. Credit: Hector Mata / AFP

Right photo: Stacey Snider. Credit: Vince Bucci / Getty Images

Think of it as a repeat of the swearing-in of President Obama in "an excess of prudence."

The Screen Actors Guild board voted for a second time to oust former executive director Doug Allen and replace the union's negotiating committee with a newly appointed task force dominated by moderates.

The move was widely anticipated, given that the board had previously taken such a vote last month by means of a "written assent."

That action, however, was challenged in a lawsuit filed last week by SAG President Alan Rosenberg and three other directors. Rosenberg has been a staunch ally of Allen and had refused to accept the board's appointment of David White as interim executive director and John McGuire as SAG's new chief negotiator. Last week, a judge denied a request for a temporary restraining order, saying the board had acted within its rights.

Sunday's vote -- supported by 59% of the 71-member board -- delivers a further blow to Rosenberg's legal challenge, which had threatened to delay a resumption in long-stalled contract negotiations with the studios. Talks are expected to resume on Feb. 17.

-- Richard Verrier

DreamWorks' planned distribution deal with Universal Pictures has collapsed as the parties are unable to agree upon final terms.

The failure of the agreement paves the way for Walt Disney Studios, which had earlier sought a distribution deal with DreamWorks, to step in as Steven Spielberg's new studio home, according to people familiar with the situation.

DreamWorks has been struggling for months to raise funds for its new studio, but efforts to raise the debt portion of its desired $1.25 billion in financing has been hampered by the global credit crisis.

DreamWorks, which split from former owner Paramount Pictures last year, is in need of some serious cash to continue financing overhead and jump-start plans to make about six movies a year. Spielberg's businesss partner, India's Reliance Entertainment, will not put up the equity portion of the financing until DreamWorks secures a matching sum in debt. DreamWorks' lead bank, JPMorgan Chase, so far has received a commitment for less than half of the $325-million loan that Spielberg hopes to have by late March. At that point, Reliance would match the bank contribution. DreamWorks is seeking to raise a total of about $1.25 billion in equity and debt.

Reliance had been pressuring Universal to advance DreamWorks at least $150 million in interim financing. But Universal, which in October announced a multi-year distribution deal with DreamWorks, balked and this morning announced it had halted talks with DreamWorks. "Over the past several weeks DreamWorks has demanded material changes to previously agreed-upon terms. It is clear DreamWorks' needs and Universal's business interests are no longer in alignment," Universal said.

Disney, which had been one of several DreamWorks distribution suitors, is in talks with the Spielberg camp and apparently willing to step in and make the investment needed by the filmmaker. Disney has always been Plan B, although Spielberg's first choice was Universal, where he began his career. Spielberg's creative partner Stacey Snider, who runs DreamWorks, used to be chairwoman of Universal Pictures.

This is the second time that Universal let DreamWorks slip away over money issues. Before being sold to Paramount in 2006 for $1.6 billion, DreamWorks had been in serious negotiations with Universal. But at the eleventh hour, Universal lowered its acquisition offer and the deal fell apart.

-- Claudia Eller

UPDATED at 4:59 p.m.:  With a judge having denied a temporary restraining order sought by Screen Actors Guild President Alan Rosenberg, the major studios are expected  to resume contract negotiations with the union. Talks have been tentatively scheduled for Feb. 17 and 18, sources familiar with the talks say.

A judge rebuffed for the second time a bid by Screen Actors Guild President Alan Rosenberg to block the union's new negotiating team from reviving contract talks with the major studios.

Rosenberg and three other board members filed a lawsuit this week seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee. They maintained the vote, taken by means of a "written assent," violated the state's business laws and the union's own bylaws.

But Los Angeles Superior Court Judge James Chalfant denied the request for a temporary restraining order, ruling that the board's action complied with the state law governing corporations. He also rejected arguments by Rosenberg's attorneys that a two-third vote was required to disband the committee.

The judge's decision removes what would have been an embarrassing setback for SAG. A restraining order could have unseated the union's newly appointed interim executive director and chief negotiator. They were tapped by the board after it fired former Executive Director Doug Allen, contending he mishandled negotiations.

Nonetheless, Thursday's ruling, which didn't dismiss the overall case, doesn't end the uncertainty over when contract negotiations with the studios will resume. Actors have been without a contract since June 30, 2008. SAG postponed planned negotiating sessions earlier this week because of the fight with its union president. 

And it's unlikely studios would agree to return to the bargaining table as long as there is a pending lawsuit challenging the legitimacy of negotiations.

Eric George, attorney for Rosenberg and the other directors, said he would file an appeal in the next few days with the California Court of Appeal.

Ned Vaughn, spokesman for the Unite for Strength group that represents so-called moderate board members, hailed the judge's ruling and called on Rosenberg to drop his complaint.

"It's outrageous that this lawsuit has further delayed negotiations,'' he said. "It's time for Alan Rosenberg to drop this and accept that SAG members voted for change. They want it now."

Rosenberg, who attended Thursday's hearing, declined to comment.

Thursday's ruling marked a second setback for Rosenberg, whose initial appeal for an injunction was denied after the judge cited several technical errors in the complaint.

“I’m pleased that we can put this matter behind us and dedicate our complete focus to the needs of Screen Actors Guild members. There’s a lot of work ahead of us,” said SAG interim National Executive Director David White.

-- Richard Verrier

Is French media giant Vivendi souring on its investment in NBC Universal -- perhaps un petit peu?

Mais non, says Vivendi Chief Executive Jean-Bernard Levy.

Nonetheless, Vivendi plans to write down the value of its 20% stake in NBC Universal next month when the French company reports its quarterly earnings. For now, Vivendi won't discuss the amount of the anticipated noncash charge, which is necessary to reflect the lower valuation of the U.S. company that boasts the NBC broadcast network, cable channels USA Network, Bravo and MSNBC, and Universal Studios. 

General Electric Co., whose stock has been pummeled in the market meltdown, owns the controlling 80% of NBC Universal. When GE and Vivendi combined their entertainment properties in 2004 to create NBC Universal, the enterprise was valued at more than $40 billion, making Vivendi's portion worth around $8 billion. (GE reiterated Tuesday that it had no plans to reduce the value of NBC that it carries on its battered books.) 

"It's a tough environment, but we are very pleased with NBC," Levy said during an interview in Santa Monica. "We are pleased with the profits that NBC has achieved; the overall performance of NBC U has been very good." 

Vivendi had an opportunity in December to divest its stake in NBC Universal  -- but it chose not to. The timing was not right because of the U.S. media company's depressed trading multiples, Levy said. Vivendi intends to hang on to its interest until the market bounces back.

How long will Vivendi be part of the peacock company? Levy would not tip his hand other than to say, "We are not long-term owners." He added that his company prefers to be in the "driver's seat" of its investments, and that is not the case with NBC.

Still, Levy is a big fan of the guy behind the wheel, NBC Universal CEO Jeff Zucker.

"I like him very much, he is an excellent manager and he certainly knows his business," Levy said of Zucker. The two CEOs spent time together last weekend in Tampa, where they attended the Super Bowl, which was televised by NBC and generated huge ratings.

Levy now is expecting Zucker to make similar gains in the financial field. "We are happy that we will share in the potential value creation that he and his team will implement," Levy said.

-- Meg James

Photo of Vivendi CEO Jean-Bernard Levy by Alex Pham/Los Angeles Times

A judge on Tuesday denied a temporary restraining order sought by SAG President Alan Rosenberg to block negotiations between the union and the major studios.

Rosenberg and three other board members are seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee, contending that the action violated the state's corporate code.

But Los Angeles Superior Court Judge James Chalfant denied the request for an injunction, citing several technical errors in the lawsuit, and ordered that the complaint be resubmitted. A hearing on the case will be held Thursday. The litigation has delayed contract negotiations that were set to resume this week.

"They are so desperate to hold on to their power that they are willing to burn down their own house,'' said New York SAG President Sam Freed, one of the board members being sued. Rosenberg declined to comment.

-- Richard Verrier

Financial news network Bloomberg Television today pulled the plug on its "Night Talk" program and bid goodbye to longtime anchor Mike Schneider.

Schneider's last program was Monday night.

Additional staff cuts and TV programming lineup changes are expected to be announced Wednesday. The moves are part of broad restructuring of the multimedia group, which includes Bloomberg Television and Bloomberg Radio, a person familiar with the situation said.

The private company, founded by New York Mayor Michael Bloomberg, generates about $6 billion a year in revenue.

But the shuffle has already begun. Bloomberg Television Managing Editor John Meehan left the company last week. His departure comes four months after former NBC, CBS and Sony BMG Music executive Andy Lack was hired to manage Bloomberg's television and radio operations. Lack brought in David Rhodes from the Fox News Channel to run the television operations.

Bloomberg operates 24 hours a day and has TV channels in 11 countries, but its sprawling operations are seen as disjointed and not making full use of its team of reporters in 143 bureaus around the world.

Although the company plans to eliminate programs and trim employees, it plans to hire additional staff this year to improve its programming to better position the company for growth, said the person familiar with the situation.

"While other news organizations are shrinking, we continue to expand, improving our existing products while investing in new ones," Bloomberg Chairman Peter Grauer said in a statement in October when Lack was hired.

-- Meg James

Summit Entertainment and Lionsgate aren't getting hitched. At least not yet, if ever.

The idea has been broached, according to insiders, but nothing is cooking. Such a corporate marriage, were it to happen, would unite a suddenly hot movie production company with Hollywood's leading independent movie and TV studio, which is behind the "Saw" and "Tyler Perry" franchises.

So far, however, Summit has played hard to get.

A few weeks before the late November release of Summit's box office smash "Twilight," the company headed by Patrick Wachsberger and Rob Friedman, was approached by Lionsgate about a potential merger. Lionsgate, well aware of the teen vampire film's hot pre-release buzz, made an offer for Summit but was rebuffed because the price was too low.

Lionsgate and Summit, which are located right around the corner from each other in Santa Monica, say privately that there have been no formal talks since last fall. That's not to say that Lionsgate Chief Executive Jon Feltheimer and Summit's Friedman, who are golfing buddies, would never discuss it between rounds. Who knows?

After all, "Twilight," which was made for $37 million and grossed $341 million worldwide, is a highly prized new movie franchise, one that would fit nicely with Lionsgate's strategy of producing moderately budgeted movies targeted at a specific audience. The sequel, "New Moon," based on the second novel of author Stephenie Meyer's popular four-book series, is due in theaters Nov. 25 of this year. The first film's director, Catherine Hardwicke, dropped out for the next installment and was replaced by Chris Weitz, whose previous credits include "The Golden Compass" and "About a Boy."

"Twilight" put the nearly 2-year-old Summit on the Hollywood map. The start-up's first five releases included such box office flops as "Penelope," "Fly Me to the Moon" and "Sex Drive." Next up for the production and international sales company is "Push," a supernatural thriller with Dakota Fanning that opens Friday, and "Knowing," a mystery thriller starring Nicolas Cage, on March 20.

--Claudia Eller

Photos: Rob Friedman, left (Kevin Winter/Getty Images) and Jon Feltheimer (Vince Bucci/Getty Images)

To virtually no one's surprise, the Screen Actors Guild and the major studios announced late Wednesday that they will return to the negotiating table Tuesday to try to forge a new contract for actors.

The move comes only two days after SAG's board hired a new negotiator, John McGuire, and a new interim executive director, David White, following the ouster of Doug Allen. At the same time, the board formed a new "task force" to replace the previous negotating committee.

Moderates who orchestrated the shake-up are expected to move quickly to finalize a new contract, which will be modeled on deals secured over the past year by three other talent unions. Their challenge will be to obtain improvements over the studios' previous "final offer" that will be acceptable to members and demonstrate that the leadership didn't capitulate under pressure.

SAG members have been working without a contract since June 30.

-- Richard Verrier

Twentieth Century Fox has agreed to co-finance the third movie in the “Chronicles of Narnia” series, pending approval of the final script and shooting budget. If all goes as planned, Fox and Walden Media, which controls the movie rights to C.S. Lewis’ classic children's books, hope to begin production on "The Voyage of the Dawn Treader" by late summer so it will be ready for holiday 2010 release.

First, however, Fox and Walden have to hire a screenwriter to do another pass on the script that was last rewritten by Richard LaGravenese, whose credits include "Freedom Writers" and "The Horse Whisperer." The movie companies are looking to make the film for about $140 million. Michael Apted, who made "Amazing Grace" and the 1999 Bond flick "The World Is Not Enough," is on board to direct.

Fox is taking a financial gamble that Disney was unwilling to wage despite helping bankroll the first two films in the "Narnia" family franchise. Walden, owned by entrepreneur Phil Anschutz, was forced to seek a new financial partner on “Dawn Treader” after Disney balked at the cost and opted out.

Fox was the most likely partner because the studio already markets and distributes Walden movies under its Fox Walden label.

Over the last few weeks, Walden chief David Weil and “Narnia” producer Mark Johnson have held a series of meetings with top Fox executives, including movie chiefs Tom Rothman and Jim Gianopulos, to discuss script revisions and the movie's cost.

While the targeted budget of “Dawn Treader” is much lower than that of the last Narnia movie, “Prince Caspian,” which cost $225 million to produce, it's still a big gamble. Released by Disney last year, the sequel was much less popular than the first "Narnia" movie, “The Lion, the Witch and the Wardrobe.” The sequel grossed $419 million worldwide compared with its 2005 predecessor, which generated $745 million in ticket sales.

Disney and Walden hope that DVD sales of "Prince Caspian" will help pull the movie out of the red.

-- Claudia Eller

Photo: "The Chronicles of Narnia: Prince Caspian" is courtesy of Walt Disney Studios

Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.

The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies. 

A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.

A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Rupert Murdoch's memo announcing Peter Chernin departure

Rupert Murdoch issued the following memo to News Corp. employees to announce that Peter Chernin would not be renewing his contract:

February 23, 2009

Dear Colleagues:

Today, we are announcing that Peter Chernin, our President and COO, will not be renewing his employment contract. Peter will be taking up the opportunity to start a new motion picture and television production venture with Fox.

Many of us who have worked with Peter over his 20 years with the company can attest to his leadership, his diligence, and his wisdom. I can also testify to Peter’s friendship, dedication, and honesty. He has been a close colleague and an ally to me for many years.

While Peter has distinguished himself at News Corp, he has also, increasingly and tirelessly, circled the globe in support of Malaria No More, which has achieved nothing short of remarkable results. Let us all wish him the best of luck, and the greatest success, as he embarks on this new chapter of his career, both as a professional and as a role model for an executive who gives back.

As you all know the downturn we are operating in is more severe and global than anything we have seen before. No company is immune to its effects. I want to take this opportunity, today, to write to you about how we will manage such an important leadership transition, and why I am convinced that today our company is not only well-positioned financially and competitively, but is on the cusp of a new phase of growth. Remember, we began priming ourselves for a weakening economy over a year ago. We have managed expenses and capital expenditure prudently, and strengthened our balance sheet. Following the partial sale of NDS, we will have over five billion dollars in cash, and this year we should exceed $3.5 billion in adjusted operating income.

Peter Chernin, president and chief operating officer of News Corp., just sent out a companywide memo confirming he is leaving the company when his contract expires in June:

I wanted to let you know that I have decided to leave News Corporation when my contract expires on June 30th.

This is not a decision that came easily, but after more than 12 years in my current job, 20 years at Newscorp, and 30 years of corporate life, I am ready for new entrepreneurial challenges. I would not be making this difficult decision if I were not confident in the superb management team we have at Fox and in the visionary leadership of Rupert Murdoch. I have worked closely with Rupert every day, and I know he shares my belief that Fox executives are the best in the business.

I want to thank Rupert for his remarkable support, encouragement and friendship over the years. No company in our industry can match News Corporation's track record of creating opportunities for employees and there is no better example of that than the opportunities Rupert has given me over the years.

I also want to thank all of you for the privilege of working side by side with such a talented and deeply principled group of colleagues. I am not only deeply proud of your achievements, but even prouder of the character and integrity of the company.

Over the next several months, Rupert and I will work closely to make sure this is a smooth transition for everyone. Thank you for the dedication and enthusiasm that you have always shown and I know will continue to show as the company moves forward to even greater heights.

Peter Chernin

In this Aug. 5, 2008 file photo, Peter Chernin, president & COO of News Corp., is seen on the floor of the New York Stock Exchange. News Corp. on Monday, Feb. 23, 2009 said Chernin will leave the company in June. (AP Photo/Richard Drew, file)

The board of the Screen Actors Guild, as expected, rejected the "final offer" by the Hollywood studios for a new contract covering the union's 120,000 members, creating fresh uncertainty about whether and when the seven-month labor dispute will end.

The rejection was widely anticipated because the studios' proposal contained a provision that SAG negotiators viewed as a non-starter.  Nonetheless, the move is likely to deepen anxiety in the movie industry, where production activity has already slowed.

The studios and SAG appeared close to striking a deal earlier this week after the union's negotiators made what they said were key concessions, including accepting a framework for how actors will be paid for their work in content distributed on the Internet. That framework is modeled upon terms agreed to by three other Hollywood talent guilds.

But SAG negotiators balked at the studios' demand that the union's contract expire in three years, rather than two years. Studio executives insist that a three-year contract is necessary to ensure stability. A three-year deal, however, would mean SAG's contract would expire a year later than the labor contracts of the American Federation of Television and Radio Artists, and the writers and directors guilds.  SAG leaders believe that would weaken their bargaining clout by preventing them from joining forces with the other unions in the next round of contract negotiations.

In a statement, SAG accused the studios of inserting a "last-minute and surprise demand" that was not brought up in earlier negotiations, including during federal mediation talks in November.

"By attempting to extend our contract expiration one year beyond the other entertainment unions, the AMPTP (Alliance of Motion Picture and Television Producers) intends to de-leverage our bargaining position from this point forward. ... The AMPTP has clearly stated their need and desire for financial certainty and industry peace.  This new proposal does the exact opposite, and will only result in constant negotiating cycles and continued labor unrest."

The AMPTP responded that its offer was “strong and fair” and that it had always sought a three year deal with SAG. "We have kept our offer on the table -- and even enhanced it -- despite the historically unprecedented economic crisis that has clobbered our nation and our industry." 

SAG's board stopped short of asking union members to approve a strike, fearing that the deep recession makes this the wrong time for such action. People close to the union, who did not want to be identified because they were not authorized to speak on the record, say the next logical step for SAG representatives is to initiate back-channel contacts with some senior studio executives to see if a showdown can be averted (typically, negotiations are conducted through the studios' negotiating arm, the Alliance of Motion Picture and Television Producers).

Meanwhile, SAG is preparing to begin negotiations Monday with producers of commercials, which are covered under a separate contract.

-- Richard Verrier

 

UPDATE: Disney says the reorganization will also create one group to identify "development opportunities" for the parks, not "acquisitions." The previous information was based on a statement erroneously provided by the company.

The Walt Disney Co. has announced a broad restructuring of its parks and resorts operation -- a move that sets the stage for more job cuts in the coming weeks.

The large-scale reorganization, which encompasses Disneyland, Disney World, cruise ships and resorts that it runs in places like Hilton Head, S.C., comes on the heels of last month's buyout package offers to 600 parks executives.

"These changes are essential to maintaining our leadership position in family tourism and reflect today's economic realities," Jay Rasulo, Parks chairman, said a statement.

Under the new structure, facets of Disneyland and Walt Disney World will be consolidated into a single domestic operation, to be headed by Worldwide Operations President Al Weiss.

Rasulo said the company would streamline its operating structure to simplify the operations -- and in the process, reduce overhead. He said the reorganization was a further step in an operational review begun in 2005 at Walt Disney Parks and Resorts, although he acknowledged that the bleak economy has accelerated the pace of the changes.

Disneyland Resort President Ed Grier and Walt Disney World Resort President Meg Crofton will continue to oversee the ride operations and other facets of customer attendance. However, Weiss' group will take over functions that cut across parks, such as procurement, menu planning and ordering stuffed animals.

The operations of Walt Disney Imagineering group will also be simplified. Chief Creative Executive Bruce Vaughn and Chief Design and Project Delivery Executive Craig Russell will continue to oversee the development of attractions for all Disney parks and resorts. But the group will no longer have separate groups devoted to development for resorts, entertainment and attractions.

A new global business development team will combine real estate development and business development under Executive Vice President Nick Franklin.

The changes are intended to streamline the organization and create one group that identifies possible acquisitions and park expansions, another that implements it and a third that is in charge of operations, company officials said.

The restructuring probably will result in job cuts, on top of the buyouts offered in January. It's unclear how many positions will be lost.

"Organization changes require difficult decisions, including the elimination of some roles," Rasulo said. "These decisions were not made lightly and we know this will be a challenging transition. The people affected are our friends and colleagues"

--Dawn C. Chmielewski

Photo credit: Timothy O'Rourke / Bloomberg News

CBS Corp., seeking to stave off a cash crunch and a downgrade its credit rating, slashed its dividend by more than 80% to 5 cents a share from 27 cents.

The broadcasting giant, releasing fourth-quarter results after the market closed, said net income plunged 52% to $136.1 million from $286.2 million in a year earlier.

Revenue was down a more modest 6% to $3.5 billion for the quarter compared with nearly $3.76 billion for the same period in 2007. The company attributed the lower top line to advertising weakness, partially offset by higher affiliate revenue from Internet media company CNet.

The dividend cut was even larger than Wall Street analysts had been expecting.

Chief Executive Leslie Moonves explained the reduction by pointing out that CBS had long been generous with its cash to investors but the economy now required the company to adjust its policy.

"CBS continues to produce strong cash flow, and we have returned $5.5 billion of that cash to shareholders in just three years as a stand-alone company," Moonves said. "However, by taking this step now, we will further strengthen our financial flexibility to meet our debt obligations even in difficult credit markets, and still provide our shareholders with an attractive dividend.”

Said CBS Executive Chairman Sumner Redstone, “We are clearly in the midst of one of the most difficult financial environments in history, with very little visibility on how long these economic conditions will continue or if there is worse to come."

Moonves, in a conference call with analysts, declined to give much guidance on the current first and upcoming second quarters. But he said he expected the second half of the year to be stronger for the company because CBS will have rerun revenue from the syndication of five TV shows "hitting the books" this fall.

-- Meg James

As the Screen Actors Guild and the major studios resumed contract negotiations today, Hollywood's below-the-line laborers wanted to deliver a message: "Let's get back to work."

About 100 film and TV workers, including cinematographers, studio drivers, makeup artists and prop makers, staged a rally this morning outside the Sherman Oaks headquarters of the Alliance of Motion Picture and Television Producers -- the negotiating arm of the studios -- urging the parties to "reach a speedy resolution to the current stalemate."

Rally organizers said their purpose was not to take a position on the contract dispute, but to convey a sense of urgency about how the continuing stalemate was creating hardships for entertainment industry workers.

"We decided we needed to be seen physically,'' said Ed Gutentag, a cinematographer and spokesman for the self-described "Let's Get Back to Work" coalition. "We're not taking sides, we just want to send a message that we're suffering by their inability to come up with a deal."

Actors have been working without a contract since June 30, creating an atmosphere of uncertainty that has contributed to a steep falloff in feature film production. The slowdown has been a double whammy for crew members, who were hit hard by the fallout from the 100-day writers strike last year.

Hope Parrish, a property master, says she hasn't worked in eight months, the longest stretch in her 29 years in the business. "Nobody is starting any projects,'' said Parrish, who worked on "The Curious Case of Benjamin Button." "I would like to see the producers negotiate a good deal with the actors so we can get back to work."

Many of the protestors belong to the International Alliance of Theatrical Stage Employees, which is grappling with its own contract issues with the studios. IATSE members are about to vote on a controversial contract that includes widely unpopular cuts in health benefits, including extending the number of hours members have to work to keep their health insurance benefits.

Also joining the rally were about 50 supporters from the Membership First faction at SAG, who've been at war with the union's board members over the firing of former executive director Doug Allen. Membership First fears the new negotiating team will capitulate to the studios, short-changing what actors earn from shows distributed on the Internet. In that spirit, they carried signs declaring, "SAG Board Sells Us Out Again" and "Vote No on Contract."

--Richard Verrier

So, here's a new twist on movie promotions.

20th Century Fox has produced a three-part trailer to promote its big-budget summer release "X-Men Orgins: Wolverine" that will run as separate 60-second spots beginning Sunday on the studio's TV shows "Family Guy," "House" and "American Idol."

Immediately after Tuesday's broadcast of the final "Wolverine" spot on "Idol," all three trailers — which together form a narrative — will appear on Yahoo.

The fourth "X-Men" movie, which debuts in theaters May 1, is one of this summer's most highly anticipated releases. The spinoff of the three earlier films, which have generated a total of $1.2 billion in worldwide ticket sales, traces the origins and transformation of the the mutant played by the humanly handsome Hugh Jackman into Wolverine. The studio is billing it as the first chapter in the X-Man saga that unites Wolverine with other legends in the X-Men character "universe."

Fox says the fourth installment of the Marvel Comics movie cost about $100 million. That would be considerably less than the cost of the 2006 sequel "X-Men: The Last Stand," which reportedly carried a price tag of more than $200 million. Why cheaper? For one, Jackman is the only major star in this "prequel." And Halle Berry, who appeared in the first three films, doesn't have a role. Nor was "Wolverine" directed by Brett Ratner, who made the last film, but rather Gavin Hood, who won the 2006 best foreign film Oscar for the low-budget crime drama "Tsotsi" and has never handled a big franchise picture.

— Claudia Eller

Photos from "Wolverine" courtesy of Fox

News Corp. Chief Executive Rupert Murdoch (above right) is in Los Angeles this week and next week to meet with top Fox executives on the West Coast.

Murdoch's presence, and his scrutiny of the company's entertainment businesses, has prompted increased speculation that Peter Chernin (above left), president and chief operating officer of News Corp., actually might be leaving the company after 20 years.  Chernin's contract expires in June.  Chernin has been particularly tight-lipped about his plans, fueling anxiety among Fox executives who want to keep Chernin, who is admired by both Wall Street and Hollywood power players.

Chernin declined to comment.

Murdoch flew into Los Angeles from Australia this week after celebrating the 100th birthday of his mother, Dame Elisabeth Murdoch, along with about 600 friends. The 77-year-old Murdoch is fond of saying that his mum's longevity bodes well for his own prospects of remaining at the helm of News Corp. for many more years.

Succession issues have bedeviled the company because Murdoch wants one of his children (he has six) to eventually run the global media empire that includes the 20th Century Fox film studio, Fox Broadcasting network, cable television outlets that include Fox News Channel, social network MySpace and a string of newspapers that includes his recently acquired jewel, The Wall Street Journal. 

Some on Wall Street worry that Murdoch's kids are not ready to manage the sprawling businesses that generated $33 billion in revenue last fiscal year. What's more, it would be a particularly awkward time for a major executive transition because the recession has hammered media companies that depend on advertising and consumer spending for such non-essential purchases as DVDs.

Last week, News Corp. reported a $6.4-billion loss for the quarter ended Dec. 31. Its stock is down 65% from a 52-week high of $20.49. 

During a conference call with analysts to discuss the results, Chernin seemed to play a less prominent role than he has in the past. Murdoch dominated the session, fielding questions about the entertainment properties that have long been Chernin's specialty.

Then there was the sticky issue of Chernin's contract.

Back during November's earnings call, when Murdoch and Chernin were asked to characterize the negotiations, Chernin called them "constructive." Murdoch quickly jumped in:  "I would characterize them as constructive and friendly."

But last week, the same question prompted a more measured response. "Peter and I are continuing our conversations and they're private and that is all there is to it," Murdoch said.  "Nothing more for me to say and we won't take any further questions on that. It is a confidential matter."

Chernin remained silent.

Murdoch's tour through Los Angeles is part of a strategic review of the company's businesses that takes place every three years, say people familiar with the situation who did not want to be identified in discussing the sensitive subject. Murdoch will hold two more weeks of meetings with top Fox executives this month in New York.

If Chernin were to leave News Corp., he would be available to step into the top job at any number of troubled media companies, of which there appears to be no shortage.

People close to Chernin said it would be hasty to draw a conclusion about Chernin's tenure and Murdoch's visit (the CEO comes here more often than people think, they said). Chernin, 57, has been known to take his employment negotiations down to the wire.  His last contract renewal, in July 2004, was announced three days before the new agreement went into effect.

— Dawn C. Chmielewski and Meg James   

Photo: Daniel Acker/Bloomberg News

Billionaire Sumner Redstone, who has been under pressure to restructure his family company's $1.6 billion in debt, said this morning that "substantial progress" had been made in talks with banks.

"An agreement is now within reach," the 85-year-old Redstone said during a conference call to discuss Viacom Inc.'s  quarterly earnings.

In October, Redstone got caught in the stock-market avalanche, which created a credit crisis for the mogul, who owns controlling stakes in Viacom -- which owns MTV, Nickelodeon, Comedy Central and Paramount Pictures movie studio -- and television and radio broadcasting behemoth CBS Corp.

His family company, National Amusements Inc., was forced to sell non-voting shares in Viacom and CBS at record-low prices to come up with cash to satisfy bankers after National Amusements defaulted on bank loans.   Since late last fall, National Amusements -- led by Redstone's daughter, Shari Redstone -- has been working closely with banks to restructure the company's debt. 

A December deadline for National Amusements to repay $800 million in bank loans was extended into this year, a signal that the elder Redstone might be able to pull off his high-wire credit act and save his media empire. In December, National Amusements jettisoned its ailing video-game company and said that it would sell some of its movie theaters to pay down debt.

Redstone did not say when he expected an agreement would be reached, and he declined to answer questions.  However, two people close to National Amusements said this week that a deal could come within the the next few weeks.

-- Meg James

DreamWorks Animation Chief Executive Jeffrey Katzenberg made a mea culpa on Wednesday, saying that the Motion Picture & Television Fund had done a poor job of communicating the reasons for its decision to close the hospital and nursing home.

"We give ourselves a failing grade,"  said Katzenberg, who chairs the charity's fundraising board. "This has not been communicated well."

But Katzenberg and other board members stood by their decision, describing it as a necessary move to preserve the viability of the organization and its various other programs, which includes six healthcare centers, child care services and a retirement community in Woodland Hills with 215 residents.

"We have made a decision that allows this incredibly important enterprise to live on and have a great future," he said during a conference call with reporters, aimed at quelling fury among the residents' family members who are angry over the facility's closure.

David Tillman, the fund's CEO, said there was a $20-million gap between program revenues and the cost of services that was projected to widen because of rising medical costs and declining reimbursements from the government. In the past, he said, the fund could rely on investment income and philanthropy to make up the shortfall, but that option is no longer possible because of the deep recession.

Frank Mancuso, chairman of the fund's corporate board, said that the board had already taken various steps to stem losses, including closing the hospital's costly intensive care unit, but had run out of options. "We left no stone unturned," he said.

-- Richard Verrier

While several of Hollywood's financially strained independent production companies have either gone under or drastically scaled back operations over the past year, Fred Smith -- the founder and chief executive of FedEx Corp. -- says he's still committed to his side business: investing in movies.

For more than a decade, the Hollywood outsider who lives in Memphis, Tenn., has quietly bankrolled Alcon Entertainment, the boutique production outfit behind such films as "My Dog Skip" and "The Sisterhood of the Traveling Pants" series. His company may not be known for any blockbuster success and has had some box-office losers like the romantic comedy "Chasing Liberty" and its debut movie, "Lost & Found." But Smith claims that, thanks to solid performers such as the romantic drama "P.S. I Love You," starring Hilary Swank and Gerald Butler, and continued financial discipline, Alcon has been a profitable venture.

He attributes the company's stamina in what he readily acknowledges is "a very tough business" to the cost-conscious "no-limos" philosophy guiding Alcon's two chief executives, Andrew Kosove and Broderick Johnson. Despite being a Yalie, Smith hired the two Princeton alums after meeting them in 1994 and being impressed with their 220-page business plan for launching a movie company.

Smith said the duo's success lies in the fact that the pair has stuck to their original strategy for lowering risks inherent to the unpredictable movie business: Keep film budgets tight and overhead low; focus on specific genres like family films; and have a strong studio partner to help market and distribute the pictures (Alcon has a multi-year distribution deal with Warner Bros. and typically sells off the international rights in its films to help finance them).

"Those three things have proven that we're the exception to the rule," Smith said when he dropped by The Times to talk about the toll that the bad economy is taking on his main business --delivering packages.

Smith ducked a question about how much of his own money he's invested in the movie business. "It's mostly been done with borrowed money," he says, noting Alcon's good fortune last year in securing a $500-million bank loan before those kind of "slate-financing" deals dried up. Smith says he used his own FedEx stock to secure the loan.

The entrepreneur, who leaves the day-to-day running of Alcon to his two movie chiefs, says he reads the occasional script and rarely visits the set of his company's movies.

His personal Alcon favorite? Smith says its Jay Russell's family movie, "My Dog Skip," based on Willie Morris' World War II memoir about a boy and his dog growing up in a small Southern town. Made for $7 million, the 2000 release grossed $35 million at the worldwide box office and did well on video. Smith said he defies anyone to watch the movie "without a tear in their eye."

Smith insists he doesn't regret his own failings as a would-be movie star. He jokes that any ambitions he may have harbored were "left on the cutting-room floor" when his three-minute cameo in Fox's 2000 "Cast Away," starring Tom Hanks as a FedEx executive in a modern-day version of Robinson Crusoe, was "so bad, so atrocious, it was cut to 18 seconds."

--Claudia Eller

Steven Spielberg's DreamWorks finalized a distribution deal with Disney today, giving the filmmaker key financial demands he failed to extract from his longtime studio alley Universal Pictures: a commitment to risk hundreds of millions in film prints and advertising costs and to share its valuable pay TV slots.

As part of the deal, Disney will also give DreamWorks -- which has been struggling to raise money for its new studio -- a cash advance of about $100 million and a potential $75-million credit line which Spielberg & Co. can draw on for future productions. Disney's total outlay of $175 million is taking the form of a loan and is not an equity investment.

But, here's the catch. While DreamWorks desperately needs the cash advance to get its slate of movies rolling, it can't access Disney's money until it raises the first phase of its debt financing -- $325 million -- which will trigger a matching equity investment by Spielberg's new studio partner India's Reliance Entertainment.

"Disney has given us all the support we need to be in a position to raise our money and launch our company," said Stacey Snider, partner and chief executive of DreamWorks.

DreamWorks initially hoped to close its bank financing by the the end of the first quarter, but that now appears to be unlikely. A person close to the matter said that a more realistic time frame is late April.

Spielberg and Reliance will continue to fund overhead at DreamWorks, which employs about 60 people, until the deal is completed.

Disney's distribution agreement calls for DreamWorks to deliver up to 30 movies over the term of the deal. DreamWorks hopes to make up to six films a year for Disney's Touchstone Films banner. The first release -- yet to be identified -- will be in 2010.

Disney will market and release the movies worldwide everywhere except India, where Mumbai-based Reliance retains the distribution rights.

The Burbank studio will advance all the prints and advertising costs in exchange for collecting a distribution fee of what could amount to as much as 10%.

DreamWorks will also be able to piggyback on Disney's pay cable deal with Starz Entertainment, which provides movie producers with a significant revenue stream worth hundreds of millions of dollars. Last year, DreamWorks had failed at an attempt to secure its own pay-TV deal with HBO.

Spielberg hooked up with Reliance last year in a 50-50 venture to relaunch DreamWorks as a new studio with hoped-for funding of $1.25 billion. Reliance agreed to match in equity what DreamWorks raises in debt, but those efforts have been greatly hampered by the global credit crisis.

Surprising news of a pending deal between DreamWorks and Disney came late last week after a previously announced agreement between the Spielberg studio and Universal Pictures fell apart. Last fall, Universal had beat Disney and other potential distributors to the punch by cinching the right to distribute DreamWorks new movies. But, as DreamWorks' attempts to raise all of its funding by early this year became derailed by the financial markets, Spielberg and Reliance put pressure on Universal to change the original terms of its distribution deal.

Among sticking points between Universal and DreamWorks was that Universal refused to put up hundreds of millions in funds for prints and ads of DreamWorks movies -- an extremely risky investment in the volatile film business. DreamWorks also wanted more movie slots from Universal's deal with HBO than the studio was able to provide.

-- Claudia Eller

Left photo: Steven Spielberg. Credit: Hector Mata / AFP

Right photo: Stacey Snider. Credit: Vince Bucci / Getty Images

Think of it as a repeat of the swearing-in of President Obama in "an excess of prudence."

The Screen Actors Guild board voted for a second time to oust former executive director Doug Allen and replace the union's negotiating committee with a newly appointed task force dominated by moderates.

The move was widely anticipated, given that the board had previously taken such a vote last month by means of a "written assent."

That action, however, was challenged in a lawsuit filed last week by SAG President Alan Rosenberg and three other directors. Rosenberg has been a staunch ally of Allen and had refused to accept the board's appointment of David White as interim executive director and John McGuire as SAG's new chief negotiator. Last week, a judge denied a request for a temporary restraining order, saying the board had acted within its rights.

Sunday's vote -- supported by 59% of the 71-member board -- delivers a further blow to Rosenberg's legal challenge, which had threatened to delay a resumption in long-stalled contract negotiations with the studios. Talks are expected to resume on Feb. 17.

-- Richard Verrier

DreamWorks' planned distribution deal with Universal Pictures has collapsed as the parties are unable to agree upon final terms.

The failure of the agreement paves the way for Walt Disney Studios, which had earlier sought a distribution deal with DreamWorks, to step in as Steven Spielberg's new studio home, according to people familiar with the situation.

DreamWorks has been struggling for months to raise funds for its new studio, but efforts to raise the debt portion of its desired $1.25 billion in financing has been hampered by the global credit crisis.

DreamWorks, which split from former owner Paramount Pictures last year, is in need of some serious cash to continue financing overhead and jump-start plans to make about six movies a year. Spielberg's businesss partner, India's Reliance Entertainment, will not put up the equity portion of the financing until DreamWorks secures a matching sum in debt. DreamWorks' lead bank, JPMorgan Chase, so far has received a commitment for less than half of the $325-million loan that Spielberg hopes to have by late March. At that point, Reliance would match the bank contribution. DreamWorks is seeking to raise a total of about $1.25 billion in equity and debt.

Reliance had been pressuring Universal to advance DreamWorks at least $150 million in interim financing. But Universal, which in October announced a multi-year distribution deal with DreamWorks, balked and this morning announced it had halted talks with DreamWorks. "Over the past several weeks DreamWorks has demanded material changes to previously agreed-upon terms. It is clear DreamWorks' needs and Universal's business interests are no longer in alignment," Universal said.

Disney, which had been one of several DreamWorks distribution suitors, is in talks with the Spielberg camp and apparently willing to step in and make the investment needed by the filmmaker. Disney has always been Plan B, although Spielberg's first choice was Universal, where he began his career. Spielberg's creative partner Stacey Snider, who runs DreamWorks, used to be chairwoman of Universal Pictures.

This is the second time that Universal let DreamWorks slip away over money issues. Before being sold to Paramount in 2006 for $1.6 billion, DreamWorks had been in serious negotiations with Universal. But at the eleventh hour, Universal lowered its acquisition offer and the deal fell apart.

-- Claudia Eller

UPDATED at 4:59 p.m.:  With a judge having denied a temporary restraining order sought by Screen Actors Guild President Alan Rosenberg, the major studios are expected  to resume contract negotiations with the union. Talks have been tentatively scheduled for Feb. 17 and 18, sources familiar with the talks say.

A judge rebuffed for the second time a bid by Screen Actors Guild President Alan Rosenberg to block the union's new negotiating team from reviving contract talks with the major studios.

Rosenberg and three other board members filed a lawsuit this week seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee. They maintained the vote, taken by means of a "written assent," violated the state's business laws and the union's own bylaws.

But Los Angeles Superior Court Judge James Chalfant denied the request for a temporary restraining order, ruling that the board's action complied with the state law governing corporations. He also rejected arguments by Rosenberg's attorneys that a two-third vote was required to disband the committee.

The judge's decision removes what would have been an embarrassing setback for SAG. A restraining order could have unseated the union's newly appointed interim executive director and chief negotiator. They were tapped by the board after it fired former Executive Director Doug Allen, contending he mishandled negotiations.

Nonetheless, Thursday's ruling, which didn't dismiss the overall case, doesn't end the uncertainty over when contract negotiations with the studios will resume. Actors have been without a contract since June 30, 2008. SAG postponed planned negotiating sessions earlier this week because of the fight with its union president. 

And it's unlikely studios would agree to return to the bargaining table as long as there is a pending lawsuit challenging the legitimacy of negotiations.

Eric George, attorney for Rosenberg and the other directors, said he would file an appeal in the next few days with the California Court of Appeal.

Ned Vaughn, spokesman for the Unite for Strength group that represents so-called moderate board members, hailed the judge's ruling and called on Rosenberg to drop his complaint.

"It's outrageous that this lawsuit has further delayed negotiations,'' he said. "It's time for Alan Rosenberg to drop this and accept that SAG members voted for change. They want it now."

Rosenberg, who attended Thursday's hearing, declined to comment.

Thursday's ruling marked a second setback for Rosenberg, whose initial appeal for an injunction was denied after the judge cited several technical errors in the complaint.

“I’m pleased that we can put this matter behind us and dedicate our complete focus to the needs of Screen Actors Guild members. There’s a lot of work ahead of us,” said SAG interim National Executive Director David White.

-- Richard Verrier

Is French media giant Vivendi souring on its investment in NBC Universal -- perhaps un petit peu?

Mais non, says Vivendi Chief Executive Jean-Bernard Levy.

Nonetheless, Vivendi plans to write down the value of its 20% stake in NBC Universal next month when the French company reports its quarterly earnings. For now, Vivendi won't discuss the amount of the anticipated noncash charge, which is necessary to reflect the lower valuation of the U.S. company that boasts the NBC broadcast network, cable channels USA Network, Bravo and MSNBC, and Universal Studios. 

General Electric Co., whose stock has been pummeled in the market meltdown, owns the controlling 80% of NBC Universal. When GE and Vivendi combined their entertainment properties in 2004 to create NBC Universal, the enterprise was valued at more than $40 billion, making Vivendi's portion worth around $8 billion. (GE reiterated Tuesday that it had no plans to reduce the value of NBC that it carries on its battered books.) 

"It's a tough environment, but we are very pleased with NBC," Levy said during an interview in Santa Monica. "We are pleased with the profits that NBC has achieved; the overall performance of NBC U has been very good." 

Vivendi had an opportunity in December to divest its stake in NBC Universal  -- but it chose not to. The timing was not right because of the U.S. media company's depressed trading multiples, Levy said. Vivendi intends to hang on to its interest until the market bounces back.

How long will Vivendi be part of the peacock company? Levy would not tip his hand other than to say, "We are not long-term owners." He added that his company prefers to be in the "driver's seat" of its investments, and that is not the case with NBC.

Still, Levy is a big fan of the guy behind the wheel, NBC Universal CEO Jeff Zucker.

"I like him very much, he is an excellent manager and he certainly knows his business," Levy said of Zucker. The two CEOs spent time together last weekend in Tampa, where they attended the Super Bowl, which was televised by NBC and generated huge ratings.

Levy now is expecting Zucker to make similar gains in the financial field. "We are happy that we will share in the potential value creation that he and his team will implement," Levy said.

-- Meg James

Photo of Vivendi CEO Jean-Bernard Levy by Alex Pham/Los Angeles Times

A judge on Tuesday denied a temporary restraining order sought by SAG President Alan Rosenberg to block negotiations between the union and the major studios.

Rosenberg and three other board members are seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee, contending that the action violated the state's corporate code.

But Los Angeles Superior Court Judge James Chalfant denied the request for an injunction, citing several technical errors in the lawsuit, and ordered that the complaint be resubmitted. A hearing on the case will be held Thursday. The litigation has delayed contract negotiations that were set to resume this week.

"They are so desperate to hold on to their power that they are willing to burn down their own house,'' said New York SAG President Sam Freed, one of the board members being sued. Rosenberg declined to comment.

-- Richard Verrier

Financial news network Bloomberg Television today pulled the plug on its "Night Talk" program and bid goodbye to longtime anchor Mike Schneider.

Schneider's last program was Monday night.

Additional staff cuts and TV programming lineup changes are expected to be announced Wednesday. The moves are part of broad restructuring of the multimedia group, which includes Bloomberg Television and Bloomberg Radio, a person familiar with the situation said.

The private company, founded by New York Mayor Michael Bloomberg, generates about $6 billion a year in revenue.

But the shuffle has already begun. Bloomberg Television Managing Editor John Meehan left the company last week. His departure comes four months after former NBC, CBS and Sony BMG Music executive Andy Lack was hired to manage Bloomberg's television and radio operations. Lack brought in David Rhodes from the Fox News Channel to run the television operations.

Bloomberg operates 24 hours a day and has TV channels in 11 countries, but its sprawling operations are seen as disjointed and not making full use of its team of reporters in 143 bureaus around the world.

Although the company plans to eliminate programs and trim employees, it plans to hire additional staff this year to improve its programming to better position the company for growth, said the person familiar with the situation.

"While other news organizations are shrinking, we continue to expand, improving our existing products while investing in new ones," Bloomberg Chairman Peter Grauer said in a statement in October when Lack was hired.

-- Meg James

Summit Entertainment and Lionsgate aren't getting hitched. At least not yet, if ever.

The idea has been broached, according to insiders, but nothing is cooking. Such a corporate marriage, were it to happen, would unite a suddenly hot movie production company with Hollywood's leading independent movie and TV studio, which is behind the "Saw" and "Tyler Perry" franchises.

So far, however, Summit has played hard to get.

A few weeks before the late November release of Summit's box office smash "Twilight," the company headed by Patrick Wachsberger and Rob Friedman, was approached by Lionsgate about a potential merger. Lionsgate, well aware of the teen vampire film's hot pre-release buzz, made an offer for Summit but was rebuffed because the price was too low.

Lionsgate and Summit, which are located right around the corner from each other in Santa Monica, say privately that there have been no formal talks since last fall. That's not to say that Lionsgate Chief Executive Jon Feltheimer and Summit's Friedman, who are golfing buddies, would never discuss it between rounds. Who knows?

After all, "Twilight," which was made for $37 million and grossed $341 million worldwide, is a highly prized new movie franchise, one that would fit nicely with Lionsgate's strategy of producing moderately budgeted movies targeted at a specific audience. The sequel, "New Moon," based on the second novel of author Stephenie Meyer's popular four-book series, is due in theaters Nov. 25 of this year. The first film's director, Catherine Hardwicke, dropped out for the next installment and was replaced by Chris Weitz, whose previous credits include "The Golden Compass" and "About a Boy."

"Twilight" put the nearly 2-year-old Summit on the Hollywood map. The start-up's first five releases included such box office flops as "Penelope," "Fly Me to the Moon" and "Sex Drive." Next up for the production and international sales company is "Push," a supernatural thriller with Dakota Fanning that opens Friday, and "Knowing," a mystery thriller starring Nicolas Cage, on March 20.

--Claudia Eller

Photos: Rob Friedman, left (Kevin Winter/Getty Images) and Jon Feltheimer (Vince Bucci/Getty Images)

To virtually no one's surprise, the Screen Actors Guild and the major studios announced late Wednesday that they will return to the negotiating table Tuesday to try to forge a new contract for actors.

The move comes only two days after SAG's board hired a new negotiator, John McGuire, and a new interim executive director, David White, following the ouster of Doug Allen. At the same time, the board formed a new "task force" to replace the previous negotating committee.

Moderates who orchestrated the shake-up are expected to move quickly to finalize a new contract, which will be modeled on deals secured over the past year by three other talent unions. Their challenge will be to obtain improvements over the studios' previous "final offer" that will be acceptable to members and demonstrate that the leadership didn't capitulate under pressure.

SAG members have been working without a contract since June 30.

-- Richard Verrier

Twentieth Century Fox has agreed to co-finance the third movie in the “Chronicles of Narnia” series, pending approval of the final script and shooting budget. If all goes as planned, Fox and Walden Media, which controls the movie rights to C.S. Lewis’ classic children's books, hope to begin production on "The Voyage of the Dawn Treader" by late summer so it will be ready for holiday 2010 release.

First, however, Fox and Walden have to hire a screenwriter to do another pass on the script that was last rewritten by Richard LaGravenese, whose credits include "Freedom Writers" and "The Horse Whisperer." The movie companies are looking to make the film for about $140 million. Michael Apted, who made "Amazing Grace" and the 1999 Bond flick "The World Is Not Enough," is on board to direct.

Fox is taking a financial gamble that Disney was unwilling to wage despite helping bankroll the first two films in the "Narnia" family franchise. Walden, owned by entrepreneur Phil Anschutz, was forced to seek a new financial partner on “Dawn Treader” after Disney balked at the cost and opted out.

Fox was the most likely partner because the studio already markets and distributes Walden movies under its Fox Walden label.

Over the last few weeks, Walden chief David Weil and “Narnia” producer Mark Johnson have held a series of meetings with top Fox executives, including movie chiefs Tom Rothman and Jim Gianopulos, to discuss script revisions and the movie's cost.

While the targeted budget of “Dawn Treader” is much lower than that of the last Narnia movie, “Prince Caspian,” which cost $225 million to produce, it's still a big gamble. Released by Disney last year, the sequel was much less popular than the first "Narnia" movie, “The Lion, the Witch and the Wardrobe.” The sequel grossed $419 million worldwide compared with its 2005 predecessor, which generated $745 million in ticket sales.

Disney and Walden hope that DVD sales of "Prince Caspian" will help pull the movie out of the red.

-- Claudia Eller

Photo: "The Chronicles of Narnia: Prince Caspian" is courtesy of Walt Disney Studios

Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.

The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies. 

A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.

A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Peter's Chernin's memo to staff announcing he will leave News Corp.

Peter Chernin, president and chief operating officer of News Corp., just sent out a companywide memo confirming he is leaving the company when his contract expires in June:

I wanted to let you know that I have decided to leave News Corporation when my contract expires on June 30th.

This is not a decision that came easily, but after more than 12 years in my current job, 20 years at Newscorp, and 30 years of corporate life, I am ready for new entrepreneurial challenges. I would not be making this difficult decision if I were not confident in the superb management team we have at Fox and in the visionary leadership of Rupert Murdoch. I have worked closely with Rupert every day, and I know he shares my belief that Fox executives are the best in the business.

I want to thank Rupert for his remarkable support, encouragement and friendship over the years. No company in our industry can match News Corporation's track record of creating opportunities for employees and there is no better example of that than the opportunities Rupert has given me over the years.

I also want to thank all of you for the privilege of working side by side with such a talented and deeply principled group of colleagues. I am not only deeply proud of your achievements, but even prouder of the character and integrity of the company.

Over the next several months, Rupert and I will work closely to make sure this is a smooth transition for everyone. Thank you for the dedication and enthusiasm that you have always shown and I know will continue to show as the company moves forward to even greater heights.

Peter Chernin

In this Aug. 5, 2008 file photo, Peter Chernin, president & COO of News Corp., is seen on the floor of the New York Stock Exchange. News Corp. on Monday, Feb. 23, 2009 said Chernin will leave the company in June. (AP Photo/Richard Drew, file)

The board of the Screen Actors Guild, as expected, rejected the "final offer" by the Hollywood studios for a new contract covering the union's 120,000 members, creating fresh uncertainty about whether and when the seven-month labor dispute will end.

The rejection was widely anticipated because the studios' proposal contained a provision that SAG negotiators viewed as a non-starter.  Nonetheless, the move is likely to deepen anxiety in the movie industry, where production activity has already slowed.

The studios and SAG appeared close to striking a deal earlier this week after the union's negotiators made what they said were key concessions, including accepting a framework for how actors will be paid for their work in content distributed on the Internet. That framework is modeled upon terms agreed to by three other Hollywood talent guilds.

But SAG negotiators balked at the studios' demand that the union's contract expire in three years, rather than two years. Studio executives insist that a three-year contract is necessary to ensure stability. A three-year deal, however, would mean SAG's contract would expire a year later than the labor contracts of the American Federation of Television and Radio Artists, and the writers and directors guilds.  SAG leaders believe that would weaken their bargaining clout by preventing them from joining forces with the other unions in the next round of contract negotiations.

In a statement, SAG accused the studios of inserting a "last-minute and surprise demand" that was not brought up in earlier negotiations, including during federal mediation talks in November.

"By attempting to extend our contract expiration one year beyond the other entertainment unions, the AMPTP (Alliance of Motion Picture and Television Producers) intends to de-leverage our bargaining position from this point forward. ... The AMPTP has clearly stated their need and desire for financial certainty and industry peace.  This new proposal does the exact opposite, and will only result in constant negotiating cycles and continued labor unrest."

The AMPTP responded that its offer was “strong and fair” and that it had always sought a three year deal with SAG. "We have kept our offer on the table -- and even enhanced it -- despite the historically unprecedented economic crisis that has clobbered our nation and our industry." 

SAG's board stopped short of asking union members to approve a strike, fearing that the deep recession makes this the wrong time for such action. People close to the union, who did not want to be identified because they were not authorized to speak on the record, say the next logical step for SAG representatives is to initiate back-channel contacts with some senior studio executives to see if a showdown can be averted (typically, negotiations are conducted through the studios' negotiating arm, the Alliance of Motion Picture and Television Producers).

Meanwhile, SAG is preparing to begin negotiations Monday with producers of commercials, which are covered under a separate contract.

-- Richard Verrier

 

UPDATE: Disney says the reorganization will also create one group to identify "development opportunities" for the parks, not "acquisitions." The previous information was based on a statement erroneously provided by the company.

The Walt Disney Co. has announced a broad restructuring of its parks and resorts operation -- a move that sets the stage for more job cuts in the coming weeks.

The large-scale reorganization, which encompasses Disneyland, Disney World, cruise ships and resorts that it runs in places like Hilton Head, S.C., comes on the heels of last month's buyout package offers to 600 parks executives.

"These changes are essential to maintaining our leadership position in family tourism and reflect today's economic realities," Jay Rasulo, Parks chairman, said a statement.

Under the new structure, facets of Disneyland and Walt Disney World will be consolidated into a single domestic operation, to be headed by Worldwide Operations President Al Weiss.

Rasulo said the company would streamline its operating structure to simplify the operations -- and in the process, reduce overhead. He said the reorganization was a further step in an operational review begun in 2005 at Walt Disney Parks and Resorts, although he acknowledged that the bleak economy has accelerated the pace of the changes.

Disneyland Resort President Ed Grier and Walt Disney World Resort President Meg Crofton will continue to oversee the ride operations and other facets of customer attendance. However, Weiss' group will take over functions that cut across parks, such as procurement, menu planning and ordering stuffed animals.

The operations of Walt Disney Imagineering group will also be simplified. Chief Creative Executive Bruce Vaughn and Chief Design and Project Delivery Executive Craig Russell will continue to oversee the development of attractions for all Disney parks and resorts. But the group will no longer have separate groups devoted to development for resorts, entertainment and attractions.

A new global business development team will combine real estate development and business development under Executive Vice President Nick Franklin.

The changes are intended to streamline the organization and create one group that identifies possible acquisitions and park expansions, another that implements it and a third that is in charge of operations, company officials said.

The restructuring probably will result in job cuts, on top of the buyouts offered in January. It's unclear how many positions will be lost.

"Organization changes require difficult decisions, including the elimination of some roles," Rasulo said. "These decisions were not made lightly and we know this will be a challenging transition. The people affected are our friends and colleagues"

--Dawn C. Chmielewski

Photo credit: Timothy O'Rourke / Bloomberg News

CBS Corp., seeking to stave off a cash crunch and a downgrade its credit rating, slashed its dividend by more than 80% to 5 cents a share from 27 cents.

The broadcasting giant, releasing fourth-quarter results after the market closed, said net income plunged 52% to $136.1 million from $286.2 million in a year earlier.

Revenue was down a more modest 6% to $3.5 billion for the quarter compared with nearly $3.76 billion for the same period in 2007. The company attributed the lower top line to advertising weakness, partially offset by higher affiliate revenue from Internet media company CNet.

The dividend cut was even larger than Wall Street analysts had been expecting.

Chief Executive Leslie Moonves explained the reduction by pointing out that CBS had long been generous with its cash to investors but the economy now required the company to adjust its policy.

"CBS continues to produce strong cash flow, and we have returned $5.5 billion of that cash to shareholders in just three years as a stand-alone company," Moonves said. "However, by taking this step now, we will further strengthen our financial flexibility to meet our debt obligations even in difficult credit markets, and still provide our shareholders with an attractive dividend.”

Said CBS Executive Chairman Sumner Redstone, “We are clearly in the midst of one of the most difficult financial environments in history, with very little visibility on how long these economic conditions will continue or if there is worse to come."

Moonves, in a conference call with analysts, declined to give much guidance on the current first and upcoming second quarters. But he said he expected the second half of the year to be stronger for the company because CBS will have rerun revenue from the syndication of five TV shows "hitting the books" this fall.

-- Meg James

As the Screen Actors Guild and the major studios resumed contract negotiations today, Hollywood's below-the-line laborers wanted to deliver a message: "Let's get back to work."

About 100 film and TV workers, including cinematographers, studio drivers, makeup artists and prop makers, staged a rally this morning outside the Sherman Oaks headquarters of the Alliance of Motion Picture and Television Producers -- the negotiating arm of the studios -- urging the parties to "reach a speedy resolution to the current stalemate."

Rally organizers said their purpose was not to take a position on the contract dispute, but to convey a sense of urgency about how the continuing stalemate was creating hardships for entertainment industry workers.

"We decided we needed to be seen physically,'' said Ed Gutentag, a cinematographer and spokesman for the self-described "Let's Get Back to Work" coalition. "We're not taking sides, we just want to send a message that we're suffering by their inability to come up with a deal."

Actors have been working without a contract since June 30, creating an atmosphere of uncertainty that has contributed to a steep falloff in feature film production. The slowdown has been a double whammy for crew members, who were hit hard by the fallout from the 100-day writers strike last year.

Hope Parrish, a property master, says she hasn't worked in eight months, the longest stretch in her 29 years in the business. "Nobody is starting any projects,'' said Parrish, who worked on "The Curious Case of Benjamin Button." "I would like to see the producers negotiate a good deal with the actors so we can get back to work."

Many of the protestors belong to the International Alliance of Theatrical Stage Employees, which is grappling with its own contract issues with the studios. IATSE members are about to vote on a controversial contract that includes widely unpopular cuts in health benefits, including extending the number of hours members have to work to keep their health insurance benefits.

Also joining the rally were about 50 supporters from the Membership First faction at SAG, who've been at war with the union's board members over the firing of former executive director Doug Allen. Membership First fears the new negotiating team will capitulate to the studios, short-changing what actors earn from shows distributed on the Internet. In that spirit, they carried signs declaring, "SAG Board Sells Us Out Again" and "Vote No on Contract."

--Richard Verrier

So, here's a new twist on movie promotions.

20th Century Fox has produced a three-part trailer to promote its big-budget summer release "X-Men Orgins: Wolverine" that will run as separate 60-second spots beginning Sunday on the studio's TV shows "Family Guy," "House" and "American Idol."

Immediately after Tuesday's broadcast of the final "Wolverine" spot on "Idol," all three trailers — which together form a narrative — will appear on Yahoo.

The fourth "X-Men" movie, which debuts in theaters May 1, is one of this summer's most highly anticipated releases. The spinoff of the three earlier films, which have generated a total of $1.2 billion in worldwide ticket sales, traces the origins and transformation of the the mutant played by the humanly handsome Hugh Jackman into Wolverine. The studio is billing it as the first chapter in the X-Man saga that unites Wolverine with other legends in the X-Men character "universe."

Fox says the fourth installment of the Marvel Comics movie cost about $100 million. That would be considerably less than the cost of the 2006 sequel "X-Men: The Last Stand," which reportedly carried a price tag of more than $200 million. Why cheaper? For one, Jackman is the only major star in this "prequel." And Halle Berry, who appeared in the first three films, doesn't have a role. Nor was "Wolverine" directed by Brett Ratner, who made the last film, but rather Gavin Hood, who won the 2006 best foreign film Oscar for the low-budget crime drama "Tsotsi" and has never handled a big franchise picture.

— Claudia Eller

Photos from "Wolverine" courtesy of Fox

News Corp. Chief Executive Rupert Murdoch (above right) is in Los Angeles this week and next week to meet with top Fox executives on the West Coast.

Murdoch's presence, and his scrutiny of the company's entertainment businesses, has prompted increased speculation that Peter Chernin (above left), president and chief operating officer of News Corp., actually might be leaving the company after 20 years.  Chernin's contract expires in June.  Chernin has been particularly tight-lipped about his plans, fueling anxiety among Fox executives who want to keep Chernin, who is admired by both Wall Street and Hollywood power players.

Chernin declined to comment.

Murdoch flew into Los Angeles from Australia this week after celebrating the 100th birthday of his mother, Dame Elisabeth Murdoch, along with about 600 friends. The 77-year-old Murdoch is fond of saying that his mum's longevity bodes well for his own prospects of remaining at the helm of News Corp. for many more years.

Succession issues have bedeviled the company because Murdoch wants one of his children (he has six) to eventually run the global media empire that includes the 20th Century Fox film studio, Fox Broadcasting network, cable television outlets that include Fox News Channel, social network MySpace and a string of newspapers that includes his recently acquired jewel, The Wall Street Journal. 

Some on Wall Street worry that Murdoch's kids are not ready to manage the sprawling businesses that generated $33 billion in revenue last fiscal year. What's more, it would be a particularly awkward time for a major executive transition because the recession has hammered media companies that depend on advertising and consumer spending for such non-essential purchases as DVDs.

Last week, News Corp. reported a $6.4-billion loss for the quarter ended Dec. 31. Its stock is down 65% from a 52-week high of $20.49. 

During a conference call with analysts to discuss the results, Chernin seemed to play a less prominent role than he has in the past. Murdoch dominated the session, fielding questions about the entertainment properties that have long been Chernin's specialty.

Then there was the sticky issue of Chernin's contract.

Back during November's earnings call, when Murdoch and Chernin were asked to characterize the negotiations, Chernin called them "constructive." Murdoch quickly jumped in:  "I would characterize them as constructive and friendly."

But last week, the same question prompted a more measured response. "Peter and I are continuing our conversations and they're private and that is all there is to it," Murdoch said.  "Nothing more for me to say and we won't take any further questions on that. It is a confidential matter."

Chernin remained silent.

Murdoch's tour through Los Angeles is part of a strategic review of the company's businesses that takes place every three years, say people familiar with the situation who did not want to be identified in discussing the sensitive subject. Murdoch will hold two more weeks of meetings with top Fox executives this month in New York.

If Chernin were to leave News Corp., he would be available to step into the top job at any number of troubled media companies, of which there appears to be no shortage.

People close to Chernin said it would be hasty to draw a conclusion about Chernin's tenure and Murdoch's visit (the CEO comes here more often than people think, they said). Chernin, 57, has been known to take his employment negotiations down to the wire.  His last contract renewal, in July 2004, was announced three days before the new agreement went into effect.

— Dawn C. Chmielewski and Meg James   

Photo: Daniel Acker/Bloomberg News

Billionaire Sumner Redstone, who has been under pressure to restructure his family company's $1.6 billion in debt, said this morning that "substantial progress" had been made in talks with banks.

"An agreement is now within reach," the 85-year-old Redstone said during a conference call to discuss Viacom Inc.'s  quarterly earnings.

In October, Redstone got caught in the stock-market avalanche, which created a credit crisis for the mogul, who owns controlling stakes in Viacom -- which owns MTV, Nickelodeon, Comedy Central and Paramount Pictures movie studio -- and television and radio broadcasting behemoth CBS Corp.

His family company, National Amusements Inc., was forced to sell non-voting shares in Viacom and CBS at record-low prices to come up with cash to satisfy bankers after National Amusements defaulted on bank loans.   Since late last fall, National Amusements -- led by Redstone's daughter, Shari Redstone -- has been working closely with banks to restructure the company's debt. 

A December deadline for National Amusements to repay $800 million in bank loans was extended into this year, a signal that the elder Redstone might be able to pull off his high-wire credit act and save his media empire. In December, National Amusements jettisoned its ailing video-game company and said that it would sell some of its movie theaters to pay down debt.

Redstone did not say when he expected an agreement would be reached, and he declined to answer questions.  However, two people close to National Amusements said this week that a deal could come within the the next few weeks.

-- Meg James

DreamWorks Animation Chief Executive Jeffrey Katzenberg made a mea culpa on Wednesday, saying that the Motion Picture & Television Fund had done a poor job of communicating the reasons for its decision to close the hospital and nursing home.

"We give ourselves a failing grade,"  said Katzenberg, who chairs the charity's fundraising board. "This has not been communicated well."

But Katzenberg and other board members stood by their decision, describing it as a necessary move to preserve the viability of the organization and its various other programs, which includes six healthcare centers, child care services and a retirement community in Woodland Hills with 215 residents.

"We have made a decision that allows this incredibly important enterprise to live on and have a great future," he said during a conference call with reporters, aimed at quelling fury among the residents' family members who are angry over the facility's closure.

David Tillman, the fund's CEO, said there was a $20-million gap between program revenues and the cost of services that was projected to widen because of rising medical costs and declining reimbursements from the government. In the past, he said, the fund could rely on investment income and philanthropy to make up the shortfall, but that option is no longer possible because of the deep recession.

Frank Mancuso, chairman of the fund's corporate board, said that the board had already taken various steps to stem losses, including closing the hospital's costly intensive care unit, but had run out of options. "We left no stone unturned," he said.

-- Richard Verrier

While several of Hollywood's financially strained independent production companies have either gone under or drastically scaled back operations over the past year, Fred Smith -- the founder and chief executive of FedEx Corp. -- says he's still committed to his side business: investing in movies.

For more than a decade, the Hollywood outsider who lives in Memphis, Tenn., has quietly bankrolled Alcon Entertainment, the boutique production outfit behind such films as "My Dog Skip" and "The Sisterhood of the Traveling Pants" series. His company may not be known for any blockbuster success and has had some box-office losers like the romantic comedy "Chasing Liberty" and its debut movie, "Lost & Found." But Smith claims that, thanks to solid performers such as the romantic drama "P.S. I Love You," starring Hilary Swank and Gerald Butler, and continued financial discipline, Alcon has been a profitable venture.

He attributes the company's stamina in what he readily acknowledges is "a very tough business" to the cost-conscious "no-limos" philosophy guiding Alcon's two chief executives, Andrew Kosove and Broderick Johnson. Despite being a Yalie, Smith hired the two Princeton alums after meeting them in 1994 and being impressed with their 220-page business plan for launching a movie company.

Smith said the duo's success lies in the fact that the pair has stuck to their original strategy for lowering risks inherent to the unpredictable movie business: Keep film budgets tight and overhead low; focus on specific genres like family films; and have a strong studio partner to help market and distribute the pictures (Alcon has a multi-year distribution deal with Warner Bros. and typically sells off the international rights in its films to help finance them).

"Those three things have proven that we're the exception to the rule," Smith said when he dropped by The Times to talk about the toll that the bad economy is taking on his main business --delivering packages.

Smith ducked a question about how much of his own money he's invested in the movie business. "It's mostly been done with borrowed money," he says, noting Alcon's good fortune last year in securing a $500-million bank loan before those kind of "slate-financing" deals dried up. Smith says he used his own FedEx stock to secure the loan.

The entrepreneur, who leaves the day-to-day running of Alcon to his two movie chiefs, says he reads the occasional script and rarely visits the set of his company's movies.

His personal Alcon favorite? Smith says its Jay Russell's family movie, "My Dog Skip," based on Willie Morris' World War II memoir about a boy and his dog growing up in a small Southern town. Made for $7 million, the 2000 release grossed $35 million at the worldwide box office and did well on video. Smith said he defies anyone to watch the movie "without a tear in their eye."

Smith insists he doesn't regret his own failings as a would-be movie star. He jokes that any ambitions he may have harbored were "left on the cutting-room floor" when his three-minute cameo in Fox's 2000 "Cast Away," starring Tom Hanks as a FedEx executive in a modern-day version of Robinson Crusoe, was "so bad, so atrocious, it was cut to 18 seconds."

--Claudia Eller

Steven Spielberg's DreamWorks finalized a distribution deal with Disney today, giving the filmmaker key financial demands he failed to extract from his longtime studio alley Universal Pictures: a commitment to risk hundreds of millions in film prints and advertising costs and to share its valuable pay TV slots.

As part of the deal, Disney will also give DreamWorks -- which has been struggling to raise money for its new studio -- a cash advance of about $100 million and a potential $75-million credit line which Spielberg & Co. can draw on for future productions. Disney's total outlay of $175 million is taking the form of a loan and is not an equity investment.

But, here's the catch. While DreamWorks desperately needs the cash advance to get its slate of movies rolling, it can't access Disney's money until it raises the first phase of its debt financing -- $325 million -- which will trigger a matching equity investment by Spielberg's new studio partner India's Reliance Entertainment.

"Disney has given us all the support we need to be in a position to raise our money and launch our company," said Stacey Snider, partner and chief executive of DreamWorks.

DreamWorks initially hoped to close its bank financing by the the end of the first quarter, but that now appears to be unlikely. A person close to the matter said that a more realistic time frame is late April.

Spielberg and Reliance will continue to fund overhead at DreamWorks, which employs about 60 people, until the deal is completed.

Disney's distribution agreement calls for DreamWorks to deliver up to 30 movies over the term of the deal. DreamWorks hopes to make up to six films a year for Disney's Touchstone Films banner. The first release -- yet to be identified -- will be in 2010.

Disney will market and release the movies worldwide everywhere except India, where Mumbai-based Reliance retains the distribution rights.

The Burbank studio will advance all the prints and advertising costs in exchange for collecting a distribution fee of what could amount to as much as 10%.

DreamWorks will also be able to piggyback on Disney's pay cable deal with Starz Entertainment, which provides movie producers with a significant revenue stream worth hundreds of millions of dollars. Last year, DreamWorks had failed at an attempt to secure its own pay-TV deal with HBO.

Spielberg hooked up with Reliance last year in a 50-50 venture to relaunch DreamWorks as a new studio with hoped-for funding of $1.25 billion. Reliance agreed to match in equity what DreamWorks raises in debt, but those efforts have been greatly hampered by the global credit crisis.

Surprising news of a pending deal between DreamWorks and Disney came late last week after a previously announced agreement between the Spielberg studio and Universal Pictures fell apart. Last fall, Universal had beat Disney and other potential distributors to the punch by cinching the right to distribute DreamWorks new movies. But, as DreamWorks' attempts to raise all of its funding by early this year became derailed by the financial markets, Spielberg and Reliance put pressure on Universal to change the original terms of its distribution deal.

Among sticking points between Universal and DreamWorks was that Universal refused to put up hundreds of millions in funds for prints and ads of DreamWorks movies -- an extremely risky investment in the volatile film business. DreamWorks also wanted more movie slots from Universal's deal with HBO than the studio was able to provide.

-- Claudia Eller

Left photo: Steven Spielberg. Credit: Hector Mata / AFP

Right photo: Stacey Snider. Credit: Vince Bucci / Getty Images

Think of it as a repeat of the swearing-in of President Obama in "an excess of prudence."

The Screen Actors Guild board voted for a second time to oust former executive director Doug Allen and replace the union's negotiating committee with a newly appointed task force dominated by moderates.

The move was widely anticipated, given that the board had previously taken such a vote last month by means of a "written assent."

That action, however, was challenged in a lawsuit filed last week by SAG President Alan Rosenberg and three other directors. Rosenberg has been a staunch ally of Allen and had refused to accept the board's appointment of David White as interim executive director and John McGuire as SAG's new chief negotiator. Last week, a judge denied a request for a temporary restraining order, saying the board had acted within its rights.

Sunday's vote -- supported by 59% of the 71-member board -- delivers a further blow to Rosenberg's legal challenge, which had threatened to delay a resumption in long-stalled contract negotiations with the studios. Talks are expected to resume on Feb. 17.

-- Richard Verrier

DreamWorks' planned distribution deal with Universal Pictures has collapsed as the parties are unable to agree upon final terms.

The failure of the agreement paves the way for Walt Disney Studios, which had earlier sought a distribution deal with DreamWorks, to step in as Steven Spielberg's new studio home, according to people familiar with the situation.

DreamWorks has been struggling for months to raise funds for its new studio, but efforts to raise the debt portion of its desired $1.25 billion in financing has been hampered by the global credit crisis.

DreamWorks, which split from former owner Paramount Pictures last year, is in need of some serious cash to continue financing overhead and jump-start plans to make about six movies a year. Spielberg's businesss partner, India's Reliance Entertainment, will not put up the equity portion of the financing until DreamWorks secures a matching sum in debt. DreamWorks' lead bank, JPMorgan Chase, so far has received a commitment for less than half of the $325-million loan that Spielberg hopes to have by late March. At that point, Reliance would match the bank contribution. DreamWorks is seeking to raise a total of about $1.25 billion in equity and debt.

Reliance had been pressuring Universal to advance DreamWorks at least $150 million in interim financing. But Universal, which in October announced a multi-year distribution deal with DreamWorks, balked and this morning announced it had halted talks with DreamWorks. "Over the past several weeks DreamWorks has demanded material changes to previously agreed-upon terms. It is clear DreamWorks' needs and Universal's business interests are no longer in alignment," Universal said.

Disney, which had been one of several DreamWorks distribution suitors, is in talks with the Spielberg camp and apparently willing to step in and make the investment needed by the filmmaker. Disney has always been Plan B, although Spielberg's first choice was Universal, where he began his career. Spielberg's creative partner Stacey Snider, who runs DreamWorks, used to be chairwoman of Universal Pictures.

This is the second time that Universal let DreamWorks slip away over money issues. Before being sold to Paramount in 2006 for $1.6 billion, DreamWorks had been in serious negotiations with Universal. But at the eleventh hour, Universal lowered its acquisition offer and the deal fell apart.

-- Claudia Eller

UPDATED at 4:59 p.m.:  With a judge having denied a temporary restraining order sought by Screen Actors Guild President Alan Rosenberg, the major studios are expected  to resume contract negotiations with the union. Talks have been tentatively scheduled for Feb. 17 and 18, sources familiar with the talks say.

A judge rebuffed for the second time a bid by Screen Actors Guild President Alan Rosenberg to block the union's new negotiating team from reviving contract talks with the major studios.

Rosenberg and three other board members filed a lawsuit this week seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee. They maintained the vote, taken by means of a "written assent," violated the state's business laws and the union's own bylaws.

But Los Angeles Superior Court Judge James Chalfant denied the request for a temporary restraining order, ruling that the board's action complied with the state law governing corporations. He also rejected arguments by Rosenberg's attorneys that a two-third vote was required to disband the committee.

The judge's decision removes what would have been an embarrassing setback for SAG. A restraining order could have unseated the union's newly appointed interim executive director and chief negotiator. They were tapped by the board after it fired former Executive Director Doug Allen, contending he mishandled negotiations.

Nonetheless, Thursday's ruling, which didn't dismiss the overall case, doesn't end the uncertainty over when contract negotiations with the studios will resume. Actors have been without a contract since June 30, 2008. SAG postponed planned negotiating sessions earlier this week because of the fight with its union president. 

And it's unlikely studios would agree to return to the bargaining table as long as there is a pending lawsuit challenging the legitimacy of negotiations.

Eric George, attorney for Rosenberg and the other directors, said he would file an appeal in the next few days with the California Court of Appeal.

Ned Vaughn, spokesman for the Unite for Strength group that represents so-called moderate board members, hailed the judge's ruling and called on Rosenberg to drop his complaint.

"It's outrageous that this lawsuit has further delayed negotiations,'' he said. "It's time for Alan Rosenberg to drop this and accept that SAG members voted for change. They want it now."

Rosenberg, who attended Thursday's hearing, declined to comment.

Thursday's ruling marked a second setback for Rosenberg, whose initial appeal for an injunction was denied after the judge cited several technical errors in the complaint.

“I’m pleased that we can put this matter behind us and dedicate our complete focus to the needs of Screen Actors Guild members. There’s a lot of work ahead of us,” said SAG interim National Executive Director David White.

-- Richard Verrier

Is French media giant Vivendi souring on its investment in NBC Universal -- perhaps un petit peu?

Mais non, says Vivendi Chief Executive Jean-Bernard Levy.

Nonetheless, Vivendi plans to write down the value of its 20% stake in NBC Universal next month when the French company reports its quarterly earnings. For now, Vivendi won't discuss the amount of the anticipated noncash charge, which is necessary to reflect the lower valuation of the U.S. company that boasts the NBC broadcast network, cable channels USA Network, Bravo and MSNBC, and Universal Studios. 

General Electric Co., whose stock has been pummeled in the market meltdown, owns the controlling 80% of NBC Universal. When GE and Vivendi combined their entertainment properties in 2004 to create NBC Universal, the enterprise was valued at more than $40 billion, making Vivendi's portion worth around $8 billion. (GE reiterated Tuesday that it had no plans to reduce the value of NBC that it carries on its battered books.) 

"It's a tough environment, but we are very pleased with NBC," Levy said during an interview in Santa Monica. "We are pleased with the profits that NBC has achieved; the overall performance of NBC U has been very good." 

Vivendi had an opportunity in December to divest its stake in NBC Universal  -- but it chose not to. The timing was not right because of the U.S. media company's depressed trading multiples, Levy said. Vivendi intends to hang on to its interest until the market bounces back.

How long will Vivendi be part of the peacock company? Levy would not tip his hand other than to say, "We are not long-term owners." He added that his company prefers to be in the "driver's seat" of its investments, and that is not the case with NBC.

Still, Levy is a big fan of the guy behind the wheel, NBC Universal CEO Jeff Zucker.

"I like him very much, he is an excellent manager and he certainly knows his business," Levy said of Zucker. The two CEOs spent time together last weekend in Tampa, where they attended the Super Bowl, which was televised by NBC and generated huge ratings.

Levy now is expecting Zucker to make similar gains in the financial field. "We are happy that we will share in the potential value creation that he and his team will implement," Levy said.

-- Meg James

Photo of Vivendi CEO Jean-Bernard Levy by Alex Pham/Los Angeles Times

A judge on Tuesday denied a temporary restraining order sought by SAG President Alan Rosenberg to block negotiations between the union and the major studios.

Rosenberg and three other board members are seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee, contending that the action violated the state's corporate code.

But Los Angeles Superior Court Judge James Chalfant denied the request for an injunction, citing several technical errors in the lawsuit, and ordered that the complaint be resubmitted. A hearing on the case will be held Thursday. The litigation has delayed contract negotiations that were set to resume this week.

"They are so desperate to hold on to their power that they are willing to burn down their own house,'' said New York SAG President Sam Freed, one of the board members being sued. Rosenberg declined to comment.

-- Richard Verrier

Financial news network Bloomberg Television today pulled the plug on its "Night Talk" program and bid goodbye to longtime anchor Mike Schneider.

Schneider's last program was Monday night.

Additional staff cuts and TV programming lineup changes are expected to be announced Wednesday. The moves are part of broad restructuring of the multimedia group, which includes Bloomberg Television and Bloomberg Radio, a person familiar with the situation said.

The private company, founded by New York Mayor Michael Bloomberg, generates about $6 billion a year in revenue.

But the shuffle has already begun. Bloomberg Television Managing Editor John Meehan left the company last week. His departure comes four months after former NBC, CBS and Sony BMG Music executive Andy Lack was hired to manage Bloomberg's television and radio operations. Lack brought in David Rhodes from the Fox News Channel to run the television operations.

Bloomberg operates 24 hours a day and has TV channels in 11 countries, but its sprawling operations are seen as disjointed and not making full use of its team of reporters in 143 bureaus around the world.

Although the company plans to eliminate programs and trim employees, it plans to hire additional staff this year to improve its programming to better position the company for growth, said the person familiar with the situation.

"While other news organizations are shrinking, we continue to expand, improving our existing products while investing in new ones," Bloomberg Chairman Peter Grauer said in a statement in October when Lack was hired.

-- Meg James

Summit Entertainment and Lionsgate aren't getting hitched. At least not yet, if ever.

The idea has been broached, according to insiders, but nothing is cooking. Such a corporate marriage, were it to happen, would unite a suddenly hot movie production company with Hollywood's leading independent movie and TV studio, which is behind the "Saw" and "Tyler Perry" franchises.

So far, however, Summit has played hard to get.

A few weeks before the late November release of Summit's box office smash "Twilight," the company headed by Patrick Wachsberger and Rob Friedman, was approached by Lionsgate about a potential merger. Lionsgate, well aware of the teen vampire film's hot pre-release buzz, made an offer for Summit but was rebuffed because the price was too low.

Lionsgate and Summit, which are located right around the corner from each other in Santa Monica, say privately that there have been no formal talks since last fall. That's not to say that Lionsgate Chief Executive Jon Feltheimer and Summit's Friedman, who are golfing buddies, would never discuss it between rounds. Who knows?

After all, "Twilight," which was made for $37 million and grossed $341 million worldwide, is a highly prized new movie franchise, one that would fit nicely with Lionsgate's strategy of producing moderately budgeted movies targeted at a specific audience. The sequel, "New Moon," based on the second novel of author Stephenie Meyer's popular four-book series, is due in theaters Nov. 25 of this year. The first film's director, Catherine Hardwicke, dropped out for the next installment and was replaced by Chris Weitz, whose previous credits include "The Golden Compass" and "About a Boy."

"Twilight" put the nearly 2-year-old Summit on the Hollywood map. The start-up's first five releases included such box office flops as "Penelope," "Fly Me to the Moon" and "Sex Drive." Next up for the production and international sales company is "Push," a supernatural thriller with Dakota Fanning that opens Friday, and "Knowing," a mystery thriller starring Nicolas Cage, on March 20.

--Claudia Eller

Photos: Rob Friedman, left (Kevin Winter/Getty Images) and Jon Feltheimer (Vince Bucci/Getty Images)

To virtually no one's surprise, the Screen Actors Guild and the major studios announced late Wednesday that they will return to the negotiating table Tuesday to try to forge a new contract for actors.

The move comes only two days after SAG's board hired a new negotiator, John McGuire, and a new interim executive director, David White, following the ouster of Doug Allen. At the same time, the board formed a new "task force" to replace the previous negotating committee.

Moderates who orchestrated the shake-up are expected to move quickly to finalize a new contract, which will be modeled on deals secured over the past year by three other talent unions. Their challenge will be to obtain improvements over the studios' previous "final offer" that will be acceptable to members and demonstrate that the leadership didn't capitulate under pressure.

SAG members have been working without a contract since June 30.

-- Richard Verrier

Twentieth Century Fox has agreed to co-finance the third movie in the “Chronicles of Narnia” series, pending approval of the final script and shooting budget. If all goes as planned, Fox and Walden Media, which controls the movie rights to C.S. Lewis’ classic children's books, hope to begin production on "The Voyage of the Dawn Treader" by late summer so it will be ready for holiday 2010 release.

First, however, Fox and Walden have to hire a screenwriter to do another pass on the script that was last rewritten by Richard LaGravenese, whose credits include "Freedom Writers" and "The Horse Whisperer." The movie companies are looking to make the film for about $140 million. Michael Apted, who made "Amazing Grace" and the 1999 Bond flick "The World Is Not Enough," is on board to direct.

Fox is taking a financial gamble that Disney was unwilling to wage despite helping bankroll the first two films in the "Narnia" family franchise. Walden, owned by entrepreneur Phil Anschutz, was forced to seek a new financial partner on “Dawn Treader” after Disney balked at the cost and opted out.

Fox was the most likely partner because the studio already markets and distributes Walden movies under its Fox Walden label.

Over the last few weeks, Walden chief David Weil and “Narnia” producer Mark Johnson have held a series of meetings with top Fox executives, including movie chiefs Tom Rothman and Jim Gianopulos, to discuss script revisions and the movie's cost.

While the targeted budget of “Dawn Treader” is much lower than that of the last Narnia movie, “Prince Caspian,” which cost $225 million to produce, it's still a big gamble. Released by Disney last year, the sequel was much less popular than the first "Narnia" movie, “The Lion, the Witch and the Wardrobe.” The sequel grossed $419 million worldwide compared with its 2005 predecessor, which generated $745 million in ticket sales.

Disney and Walden hope that DVD sales of "Prince Caspian" will help pull the movie out of the red.

-- Claudia Eller

Photo: "The Chronicles of Narnia: Prince Caspian" is courtesy of Walt Disney Studios

Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.

The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies. 

A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.

A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

SAG board turns down studio offer

The board of the Screen Actors Guild, as expected, rejected the "final offer" by the Hollywood studios for a new contract covering the union's 120,000 members, creating fresh uncertainty about whether and when the seven-month labor dispute will end.

The rejection was widely anticipated because the studios' proposal contained a provision that SAG negotiators viewed as a non-starter.  Nonetheless, the move is likely to deepen anxiety in the movie industry, where production activity has already slowed.

The studios and SAG appeared close to striking a deal earlier this week after the union's negotiators made what they said were key concessions, including accepting a framework for how actors will be paid for their work in content distributed on the Internet. That framework is modeled upon terms agreed to by three other Hollywood talent guilds.

But SAG negotiators balked at the studios' demand that the union's contract expire in three years, rather than two years. Studio executives insist that a three-year contract is necessary to ensure stability. A three-year deal, however, would mean SAG's contract would expire a year later than the labor contracts of the American Federation of Television and Radio Artists, and the writers and directors guilds.  SAG leaders believe that would weaken their bargaining clout by preventing them from joining forces with the other unions in the next round of contract negotiations.

In a statement, SAG accused the studios of inserting a "last-minute and surprise demand" that was not brought up in earlier negotiations, including during federal mediation talks in November.

"By attempting to extend our contract expiration one year beyond the other entertainment unions, the AMPTP (Alliance of Motion Picture and Television Producers) intends to de-leverage our bargaining position from this point forward. ... The AMPTP has clearly stated their need and desire for financial certainty and industry peace.  This new proposal does the exact opposite, and will only result in constant negotiating cycles and continued labor unrest."

The AMPTP responded that its offer was “strong and fair” and that it had always sought a three year deal with SAG. "We have kept our offer on the table -- and even enhanced it -- despite the historically unprecedented economic crisis that has clobbered our nation and our industry." 

SAG's board stopped short of asking union members to approve a strike, fearing that the deep recession makes this the wrong time for such action. People close to the union, who did not want to be identified because they were not authorized to speak on the record, say the next logical step for SAG representatives is to initiate back-channel contacts with some senior studio executives to see if a showdown can be averted (typically, negotiations are conducted through the studios' negotiating arm, the Alliance of Motion Picture and Television Producers).

Meanwhile, SAG is preparing to begin negotiations Monday with producers of commercials, which are covered under a separate contract.

-- Richard Verrier

 

UPDATE: Disney says the reorganization will also create one group to identify "development opportunities" for the parks, not "acquisitions." The previous information was based on a statement erroneously provided by the company.

The Walt Disney Co. has announced a broad restructuring of its parks and resorts operation -- a move that sets the stage for more job cuts in the coming weeks.

The large-scale reorganization, which encompasses Disneyland, Disney World, cruise ships and resorts that it runs in places like Hilton Head, S.C., comes on the heels of last month's buyout package offers to 600 parks executives.

"These changes are essential to maintaining our leadership position in family tourism and reflect today's economic realities," Jay Rasulo, Parks chairman, said a statement.

Under the new structure, facets of Disneyland and Walt Disney World will be consolidated into a single domestic operation, to be headed by Worldwide Operations President Al Weiss.

Rasulo said the company would streamline its operating structure to simplify the operations -- and in the process, reduce overhead. He said the reorganization was a further step in an operational review begun in 2005 at Walt Disney Parks and Resorts, although he acknowledged that the bleak economy has accelerated the pace of the changes.

Disneyland Resort President Ed Grier and Walt Disney World Resort President Meg Crofton will continue to oversee the ride operations and other facets of customer attendance. However, Weiss' group will take over functions that cut across parks, such as procurement, menu planning and ordering stuffed animals.

The operations of Walt Disney Imagineering group will also be simplified. Chief Creative Executive Bruce Vaughn and Chief Design and Project Delivery Executive Craig Russell will continue to oversee the development of attractions for all Disney parks and resorts. But the group will no longer have separate groups devoted to development for resorts, entertainment and attractions.

A new global business development team will combine real estate development and business development under Executive Vice President Nick Franklin.

The changes are intended to streamline the organization and create one group that identifies possible acquisitions and park expansions, another that implements it and a third that is in charge of operations, company officials said.

The restructuring probably will result in job cuts, on top of the buyouts offered in January. It's unclear how many positions will be lost.

"Organization changes require difficult decisions, including the elimination of some roles," Rasulo said. "These decisions were not made lightly and we know this will be a challenging transition. The people affected are our friends and colleagues"

--Dawn C. Chmielewski

Photo credit: Timothy O'Rourke / Bloomberg News

CBS Corp., seeking to stave off a cash crunch and a downgrade its credit rating, slashed its dividend by more than 80% to 5 cents a share from 27 cents.

The broadcasting giant, releasing fourth-quarter results after the market closed, said net income plunged 52% to $136.1 million from $286.2 million in a year earlier.

Revenue was down a more modest 6% to $3.5 billion for the quarter compared with nearly $3.76 billion for the same period in 2007. The company attributed the lower top line to advertising weakness, partially offset by higher affiliate revenue from Internet media company CNet.

The dividend cut was even larger than Wall Street analysts had been expecting.

Chief Executive Leslie Moonves explained the reduction by pointing out that CBS had long been generous with its cash to investors but the economy now required the company to adjust its policy.

"CBS continues to produce strong cash flow, and we have returned $5.5 billion of that cash to shareholders in just three years as a stand-alone company," Moonves said. "However, by taking this step now, we will further strengthen our financial flexibility to meet our debt obligations even in difficult credit markets, and still provide our shareholders with an attractive dividend.”

Said CBS Executive Chairman Sumner Redstone, “We are clearly in the midst of one of the most difficult financial environments in history, with very little visibility on how long these economic conditions will continue or if there is worse to come."

Moonves, in a conference call with analysts, declined to give much guidance on the current first and upcoming second quarters. But he said he expected the second half of the year to be stronger for the company because CBS will have rerun revenue from the syndication of five TV shows "hitting the books" this fall.

-- Meg James

As the Screen Actors Guild and the major studios resumed contract negotiations today, Hollywood's below-the-line laborers wanted to deliver a message: "Let's get back to work."

About 100 film and TV workers, including cinematographers, studio drivers, makeup artists and prop makers, staged a rally this morning outside the Sherman Oaks headquarters of the Alliance of Motion Picture and Television Producers -- the negotiating arm of the studios -- urging the parties to "reach a speedy resolution to the current stalemate."

Rally organizers said their purpose was not to take a position on the contract dispute, but to convey a sense of urgency about how the continuing stalemate was creating hardships for entertainment industry workers.

"We decided we needed to be seen physically,'' said Ed Gutentag, a cinematographer and spokesman for the self-described "Let's Get Back to Work" coalition. "We're not taking sides, we just want to send a message that we're suffering by their inability to come up with a deal."

Actors have been working without a contract since June 30, creating an atmosphere of uncertainty that has contributed to a steep falloff in feature film production. The slowdown has been a double whammy for crew members, who were hit hard by the fallout from the 100-day writers strike last year.

Hope Parrish, a property master, says she hasn't worked in eight months, the longest stretch in her 29 years in the business. "Nobody is starting any projects,'' said Parrish, who worked on "The Curious Case of Benjamin Button." "I would like to see the producers negotiate a good deal with the actors so we can get back to work."

Many of the protestors belong to the International Alliance of Theatrical Stage Employees, which is grappling with its own contract issues with the studios. IATSE members are about to vote on a controversial contract that includes widely unpopular cuts in health benefits, including extending the number of hours members have to work to keep their health insurance benefits.

Also joining the rally were about 50 supporters from the Membership First faction at SAG, who've been at war with the union's board members over the firing of former executive director Doug Allen. Membership First fears the new negotiating team will capitulate to the studios, short-changing what actors earn from shows distributed on the Internet. In that spirit, they carried signs declaring, "SAG Board Sells Us Out Again" and "Vote No on Contract."

--Richard Verrier

So, here's a new twist on movie promotions.

20th Century Fox has produced a three-part trailer to promote its big-budget summer release "X-Men Orgins: Wolverine" that will run as separate 60-second spots beginning Sunday on the studio's TV shows "Family Guy," "House" and "American Idol."

Immediately after Tuesday's broadcast of the final "Wolverine" spot on "Idol," all three trailers — which together form a narrative — will appear on Yahoo.

The fourth "X-Men" movie, which debuts in theaters May 1, is one of this summer's most highly anticipated releases. The spinoff of the three earlier films, which have generated a total of $1.2 billion in worldwide ticket sales, traces the origins and transformation of the the mutant played by the humanly handsome Hugh Jackman into Wolverine. The studio is billing it as the first chapter in the X-Man saga that unites Wolverine with other legends in the X-Men character "universe."

Fox says the fourth installment of the Marvel Comics movie cost about $100 million. That would be considerably less than the cost of the 2006 sequel "X-Men: The Last Stand," which reportedly carried a price tag of more than $200 million. Why cheaper? For one, Jackman is the only major star in this "prequel." And Halle Berry, who appeared in the first three films, doesn't have a role. Nor was "Wolverine" directed by Brett Ratner, who made the last film, but rather Gavin Hood, who won the 2006 best foreign film Oscar for the low-budget crime drama "Tsotsi" and has never handled a big franchise picture.

— Claudia Eller

Photos from "Wolverine" courtesy of Fox

News Corp. Chief Executive Rupert Murdoch (above right) is in Los Angeles this week and next week to meet with top Fox executives on the West Coast.

Murdoch's presence, and his scrutiny of the company's entertainment businesses, has prompted increased speculation that Peter Chernin (above left), president and chief operating officer of News Corp., actually might be leaving the company after 20 years.  Chernin's contract expires in June.  Chernin has been particularly tight-lipped about his plans, fueling anxiety among Fox executives who want to keep Chernin, who is admired by both Wall Street and Hollywood power players.

Chernin declined to comment.

Murdoch flew into Los Angeles from Australia this week after celebrating the 100th birthday of his mother, Dame Elisabeth Murdoch, along with about 600 friends. The 77-year-old Murdoch is fond of saying that his mum's longevity bodes well for his own prospects of remaining at the helm of News Corp. for many more years.

Succession issues have bedeviled the company because Murdoch wants one of his children (he has six) to eventually run the global media empire that includes the 20th Century Fox film studio, Fox Broadcasting network, cable television outlets that include Fox News Channel, social network MySpace and a string of newspapers that includes his recently acquired jewel, The Wall Street Journal. 

Some on Wall Street worry that Murdoch's kids are not ready to manage the sprawling businesses that generated $33 billion in revenue last fiscal year. What's more, it would be a particularly awkward time for a major executive transition because the recession has hammered media companies that depend on advertising and consumer spending for such non-essential purchases as DVDs.

Last week, News Corp. reported a $6.4-billion loss for the quarter ended Dec. 31. Its stock is down 65% from a 52-week high of $20.49. 

During a conference call with analysts to discuss the results, Chernin seemed to play a less prominent role than he has in the past. Murdoch dominated the session, fielding questions about the entertainment properties that have long been Chernin's specialty.

Then there was the sticky issue of Chernin's contract.

Back during November's earnings call, when Murdoch and Chernin were asked to characterize the negotiations, Chernin called them "constructive." Murdoch quickly jumped in:  "I would characterize them as constructive and friendly."

But last week, the same question prompted a more measured response. "Peter and I are continuing our conversations and they're private and that is all there is to it," Murdoch said.  "Nothing more for me to say and we won't take any further questions on that. It is a confidential matter."

Chernin remained silent.

Murdoch's tour through Los Angeles is part of a strategic review of the company's businesses that takes place every three years, say people familiar with the situation who did not want to be identified in discussing the sensitive subject. Murdoch will hold two more weeks of meetings with top Fox executives this month in New York.

If Chernin were to leave News Corp., he would be available to step into the top job at any number of troubled media companies, of which there appears to be no shortage.

People close to Chernin said it would be hasty to draw a conclusion about Chernin's tenure and Murdoch's visit (the CEO comes here more often than people think, they said). Chernin, 57, has been known to take his employment negotiations down to the wire.  His last contract renewal, in July 2004, was announced three days before the new agreement went into effect.

— Dawn C. Chmielewski and Meg James   

Photo: Daniel Acker/Bloomberg News

Billionaire Sumner Redstone, who has been under pressure to restructure his family company's $1.6 billion in debt, said this morning that "substantial progress" had been made in talks with banks.

"An agreement is now within reach," the 85-year-old Redstone said during a conference call to discuss Viacom Inc.'s  quarterly earnings.

In October, Redstone got caught in the stock-market avalanche, which created a credit crisis for the mogul, who owns controlling stakes in Viacom -- which owns MTV, Nickelodeon, Comedy Central and Paramount Pictures movie studio -- and television and radio broadcasting behemoth CBS Corp.

His family company, National Amusements Inc., was forced to sell non-voting shares in Viacom and CBS at record-low prices to come up with cash to satisfy bankers after National Amusements defaulted on bank loans.   Since late last fall, National Amusements -- led by Redstone's daughter, Shari Redstone -- has been working closely with banks to restructure the company's debt. 

A December deadline for National Amusements to repay $800 million in bank loans was extended into this year, a signal that the elder Redstone might be able to pull off his high-wire credit act and save his media empire. In December, National Amusements jettisoned its ailing video-game company and said that it would sell some of its movie theaters to pay down debt.

Redstone did not say when he expected an agreement would be reached, and he declined to answer questions.  However, two people close to National Amusements said this week that a deal could come within the the next few weeks.

-- Meg James

DreamWorks Animation Chief Executive Jeffrey Katzenberg made a mea culpa on Wednesday, saying that the Motion Picture & Television Fund had done a poor job of communicating the reasons for its decision to close the hospital and nursing home.

"We give ourselves a failing grade,"  said Katzenberg, who chairs the charity's fundraising board. "This has not been communicated well."

But Katzenberg and other board members stood by their decision, describing it as a necessary move to preserve the viability of the organization and its various other programs, which includes six healthcare centers, child care services and a retirement community in Woodland Hills with 215 residents.

"We have made a decision that allows this incredibly important enterprise to live on and have a great future," he said during a conference call with reporters, aimed at quelling fury among the residents' family members who are angry over the facility's closure.

David Tillman, the fund's CEO, said there was a $20-million gap between program revenues and the cost of services that was projected to widen because of rising medical costs and declining reimbursements from the government. In the past, he said, the fund could rely on investment income and philanthropy to make up the shortfall, but that option is no longer possible because of the deep recession.

Frank Mancuso, chairman of the fund's corporate board, said that the board had already taken various steps to stem losses, including closing the hospital's costly intensive care unit, but had run out of options. "We left no stone unturned," he said.

-- Richard Verrier

While several of Hollywood's financially strained independent production companies have either gone under or drastically scaled back operations over the past year, Fred Smith -- the founder and chief executive of FedEx Corp. -- says he's still committed to his side business: investing in movies.

For more than a decade, the Hollywood outsider who lives in Memphis, Tenn., has quietly bankrolled Alcon Entertainment, the boutique production outfit behind such films as "My Dog Skip" and "The Sisterhood of the Traveling Pants" series. His company may not be known for any blockbuster success and has had some box-office losers like the romantic comedy "Chasing Liberty" and its debut movie, "Lost & Found." But Smith claims that, thanks to solid performers such as the romantic drama "P.S. I Love You," starring Hilary Swank and Gerald Butler, and continued financial discipline, Alcon has been a profitable venture.

He attributes the company's stamina in what he readily acknowledges is "a very tough business" to the cost-conscious "no-limos" philosophy guiding Alcon's two chief executives, Andrew Kosove and Broderick Johnson. Despite being a Yalie, Smith hired the two Princeton alums after meeting them in 1994 and being impressed with their 220-page business plan for launching a movie company.

Smith said the duo's success lies in the fact that the pair has stuck to their original strategy for lowering risks inherent to the unpredictable movie business: Keep film budgets tight and overhead low; focus on specific genres like family films; and have a strong studio partner to help market and distribute the pictures (Alcon has a multi-year distribution deal with Warner Bros. and typically sells off the international rights in its films to help finance them).

"Those three things have proven that we're the exception to the rule," Smith said when he dropped by The Times to talk about the toll that the bad economy is taking on his main business --delivering packages.

Smith ducked a question about how much of his own money he's invested in the movie business. "It's mostly been done with borrowed money," he says, noting Alcon's good fortune last year in securing a $500-million bank loan before those kind of "slate-financing" deals dried up. Smith says he used his own FedEx stock to secure the loan.

The entrepreneur, who leaves the day-to-day running of Alcon to his two movie chiefs, says he reads the occasional script and rarely visits the set of his company's movies.

His personal Alcon favorite? Smith says its Jay Russell's family movie, "My Dog Skip," based on Willie Morris' World War II memoir about a boy and his dog growing up in a small Southern town. Made for $7 million, the 2000 release grossed $35 million at the worldwide box office and did well on video. Smith said he defies anyone to watch the movie "without a tear in their eye."

Smith insists he doesn't regret his own failings as a would-be movie star. He jokes that any ambitions he may have harbored were "left on the cutting-room floor" when his three-minute cameo in Fox's 2000 "Cast Away," starring Tom Hanks as a FedEx executive in a modern-day version of Robinson Crusoe, was "so bad, so atrocious, it was cut to 18 seconds."

--Claudia Eller

Steven Spielberg's DreamWorks finalized a distribution deal with Disney today, giving the filmmaker key financial demands he failed to extract from his longtime studio alley Universal Pictures: a commitment to risk hundreds of millions in film prints and advertising costs and to share its valuable pay TV slots.

As part of the deal, Disney will also give DreamWorks -- which has been struggling to raise money for its new studio -- a cash advance of about $100 million and a potential $75-million credit line which Spielberg & Co. can draw on for future productions. Disney's total outlay of $175 million is taking the form of a loan and is not an equity investment.

But, here's the catch. While DreamWorks desperately needs the cash advance to get its slate of movies rolling, it can't access Disney's money until it raises the first phase of its debt financing -- $325 million -- which will trigger a matching equity investment by Spielberg's new studio partner India's Reliance Entertainment.

"Disney has given us all the support we need to be in a position to raise our money and launch our company," said Stacey Snider, partner and chief executive of DreamWorks.

DreamWorks initially hoped to close its bank financing by the the end of the first quarter, but that now appears to be unlikely. A person close to the matter said that a more realistic time frame is late April.

Spielberg and Reliance will continue to fund overhead at DreamWorks, which employs about 60 people, until the deal is completed.

Disney's distribution agreement calls for DreamWorks to deliver up to 30 movies over the term of the deal. DreamWorks hopes to make up to six films a year for Disney's Touchstone Films banner. The first release -- yet to be identified -- will be in 2010.

Disney will market and release the movies worldwide everywhere except India, where Mumbai-based Reliance retains the distribution rights.

The Burbank studio will advance all the prints and advertising costs in exchange for collecting a distribution fee of what could amount to as much as 10%.

DreamWorks will also be able to piggyback on Disney's pay cable deal with Starz Entertainment, which provides movie producers with a significant revenue stream worth hundreds of millions of dollars. Last year, DreamWorks had failed at an attempt to secure its own pay-TV deal with HBO.

Spielberg hooked up with Reliance last year in a 50-50 venture to relaunch DreamWorks as a new studio with hoped-for funding of $1.25 billion. Reliance agreed to match in equity what DreamWorks raises in debt, but those efforts have been greatly hampered by the global credit crisis.

Surprising news of a pending deal between DreamWorks and Disney came late last week after a previously announced agreement between the Spielberg studio and Universal Pictures fell apart. Last fall, Universal had beat Disney and other potential distributors to the punch by cinching the right to distribute DreamWorks new movies. But, as DreamWorks' attempts to raise all of its funding by early this year became derailed by the financial markets, Spielberg and Reliance put pressure on Universal to change the original terms of its distribution deal.

Among sticking points between Universal and DreamWorks was that Universal refused to put up hundreds of millions in funds for prints and ads of DreamWorks movies -- an extremely risky investment in the volatile film business. DreamWorks also wanted more movie slots from Universal's deal with HBO than the studio was able to provide.

-- Claudia Eller

Left photo: Steven Spielberg. Credit: Hector Mata / AFP

Right photo: Stacey Snider. Credit: Vince Bucci / Getty Images

Think of it as a repeat of the swearing-in of President Obama in "an excess of prudence."

The Screen Actors Guild board voted for a second time to oust former executive director Doug Allen and replace the union's negotiating committee with a newly appointed task force dominated by moderates.

The move was widely anticipated, given that the board had previously taken such a vote last month by means of a "written assent."

That action, however, was challenged in a lawsuit filed last week by SAG President Alan Rosenberg and three other directors. Rosenberg has been a staunch ally of Allen and had refused to accept the board's appointment of David White as interim executive director and John McGuire as SAG's new chief negotiator. Last week, a judge denied a request for a temporary restraining order, saying the board had acted within its rights.

Sunday's vote -- supported by 59% of the 71-member board -- delivers a further blow to Rosenberg's legal challenge, which had threatened to delay a resumption in long-stalled contract negotiations with the studios. Talks are expected to resume on Feb. 17.

-- Richard Verrier

DreamWorks' planned distribution deal with Universal Pictures has collapsed as the parties are unable to agree upon final terms.

The failure of the agreement paves the way for Walt Disney Studios, which had earlier sought a distribution deal with DreamWorks, to step in as Steven Spielberg's new studio home, according to people familiar with the situation.

DreamWorks has been struggling for months to raise funds for its new studio, but efforts to raise the debt portion of its desired $1.25 billion in financing has been hampered by the global credit crisis.

DreamWorks, which split from former owner Paramount Pictures last year, is in need of some serious cash to continue financing overhead and jump-start plans to make about six movies a year. Spielberg's businesss partner, India's Reliance Entertainment, will not put up the equity portion of the financing until DreamWorks secures a matching sum in debt. DreamWorks' lead bank, JPMorgan Chase, so far has received a commitment for less than half of the $325-million loan that Spielberg hopes to have by late March. At that point, Reliance would match the bank contribution. DreamWorks is seeking to raise a total of about $1.25 billion in equity and debt.

Reliance had been pressuring Universal to advance DreamWorks at least $150 million in interim financing. But Universal, which in October announced a multi-year distribution deal with DreamWorks, balked and this morning announced it had halted talks with DreamWorks. "Over the past several weeks DreamWorks has demanded material changes to previously agreed-upon terms. It is clear DreamWorks' needs and Universal's business interests are no longer in alignment," Universal said.

Disney, which had been one of several DreamWorks distribution suitors, is in talks with the Spielberg camp and apparently willing to step in and make the investment needed by the filmmaker. Disney has always been Plan B, although Spielberg's first choice was Universal, where he began his career. Spielberg's creative partner Stacey Snider, who runs DreamWorks, used to be chairwoman of Universal Pictures.

This is the second time that Universal let DreamWorks slip away over money issues. Before being sold to Paramount in 2006 for $1.6 billion, DreamWorks had been in serious negotiations with Universal. But at the eleventh hour, Universal lowered its acquisition offer and the deal fell apart.

-- Claudia Eller

UPDATED at 4:59 p.m.:  With a judge having denied a temporary restraining order sought by Screen Actors Guild President Alan Rosenberg, the major studios are expected  to resume contract negotiations with the union. Talks have been tentatively scheduled for Feb. 17 and 18, sources familiar with the talks say.

A judge rebuffed for the second time a bid by Screen Actors Guild President Alan Rosenberg to block the union's new negotiating team from reviving contract talks with the major studios.

Rosenberg and three other board members filed a lawsuit this week seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee. They maintained the vote, taken by means of a "written assent," violated the state's business laws and the union's own bylaws.

But Los Angeles Superior Court Judge James Chalfant denied the request for a temporary restraining order, ruling that the board's action complied with the state law governing corporations. He also rejected arguments by Rosenberg's attorneys that a two-third vote was required to disband the committee.

The judge's decision removes what would have been an embarrassing setback for SAG. A restraining order could have unseated the union's newly appointed interim executive director and chief negotiator. They were tapped by the board after it fired former Executive Director Doug Allen, contending he mishandled negotiations.

Nonetheless, Thursday's ruling, which didn't dismiss the overall case, doesn't end the uncertainty over when contract negotiations with the studios will resume. Actors have been without a contract since June 30, 2008. SAG postponed planned negotiating sessions earlier this week because of the fight with its union president. 

And it's unlikely studios would agree to return to the bargaining table as long as there is a pending lawsuit challenging the legitimacy of negotiations.

Eric George, attorney for Rosenberg and the other directors, said he would file an appeal in the next few days with the California Court of Appeal.

Ned Vaughn, spokesman for the Unite for Strength group that represents so-called moderate board members, hailed the judge's ruling and called on Rosenberg to drop his complaint.

"It's outrageous that this lawsuit has further delayed negotiations,'' he said. "It's time for Alan Rosenberg to drop this and accept that SAG members voted for change. They want it now."

Rosenberg, who attended Thursday's hearing, declined to comment.

Thursday's ruling marked a second setback for Rosenberg, whose initial appeal for an injunction was denied after the judge cited several technical errors in the complaint.

“I’m pleased that we can put this matter behind us and dedicate our complete focus to the needs of Screen Actors Guild members. There’s a lot of work ahead of us,” said SAG interim National Executive Director David White.

-- Richard Verrier

Is French media giant Vivendi souring on its investment in NBC Universal -- perhaps un petit peu?

Mais non, says Vivendi Chief Executive Jean-Bernard Levy.

Nonetheless, Vivendi plans to write down the value of its 20% stake in NBC Universal next month when the French company reports its quarterly earnings. For now, Vivendi won't discuss the amount of the anticipated noncash charge, which is necessary to reflect the lower valuation of the U.S. company that boasts the NBC broadcast network, cable channels USA Network, Bravo and MSNBC, and Universal Studios. 

General Electric Co., whose stock has been pummeled in the market meltdown, owns the controlling 80% of NBC Universal. When GE and Vivendi combined their entertainment properties in 2004 to create NBC Universal, the enterprise was valued at more than $40 billion, making Vivendi's portion worth around $8 billion. (GE reiterated Tuesday that it had no plans to reduce the value of NBC that it carries on its battered books.) 

"It's a tough environment, but we are very pleased with NBC," Levy said during an interview in Santa Monica. "We are pleased with the profits that NBC has achieved; the overall performance of NBC U has been very good." 

Vivendi had an opportunity in December to divest its stake in NBC Universal  -- but it chose not to. The timing was not right because of the U.S. media company's depressed trading multiples, Levy said. Vivendi intends to hang on to its interest until the market bounces back.

How long will Vivendi be part of the peacock company? Levy would not tip his hand other than to say, "We are not long-term owners." He added that his company prefers to be in the "driver's seat" of its investments, and that is not the case with NBC.

Still, Levy is a big fan of the guy behind the wheel, NBC Universal CEO Jeff Zucker.

"I like him very much, he is an excellent manager and he certainly knows his business," Levy said of Zucker. The two CEOs spent time together last weekend in Tampa, where they attended the Super Bowl, which was televised by NBC and generated huge ratings.

Levy now is expecting Zucker to make similar gains in the financial field. "We are happy that we will share in the potential value creation that he and his team will implement," Levy said.

-- Meg James

Photo of Vivendi CEO Jean-Bernard Levy by Alex Pham/Los Angeles Times

A judge on Tuesday denied a temporary restraining order sought by SAG President Alan Rosenberg to block negotiations between the union and the major studios.

Rosenberg and three other board members are seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee, contending that the action violated the state's corporate code.

But Los Angeles Superior Court Judge James Chalfant denied the request for an injunction, citing several technical errors in the lawsuit, and ordered that the complaint be resubmitted. A hearing on the case will be held Thursday. The litigation has delayed contract negotiations that were set to resume this week.

"They are so desperate to hold on to their power that they are willing to burn down their own house,'' said New York SAG President Sam Freed, one of the board members being sued. Rosenberg declined to comment.

-- Richard Verrier

Financial news network Bloomberg Television today pulled the plug on its "Night Talk" program and bid goodbye to longtime anchor Mike Schneider.

Schneider's last program was Monday night.

Additional staff cuts and TV programming lineup changes are expected to be announced Wednesday. The moves are part of broad restructuring of the multimedia group, which includes Bloomberg Television and Bloomberg Radio, a person familiar with the situation said.

The private company, founded by New York Mayor Michael Bloomberg, generates about $6 billion a year in revenue.

But the shuffle has already begun. Bloomberg Television Managing Editor John Meehan left the company last week. His departure comes four months after former NBC, CBS and Sony BMG Music executive Andy Lack was hired to manage Bloomberg's television and radio operations. Lack brought in David Rhodes from the Fox News Channel to run the television operations.

Bloomberg operates 24 hours a day and has TV channels in 11 countries, but its sprawling operations are seen as disjointed and not making full use of its team of reporters in 143 bureaus around the world.

Although the company plans to eliminate programs and trim employees, it plans to hire additional staff this year to improve its programming to better position the company for growth, said the person familiar with the situation.

"While other news organizations are shrinking, we continue to expand, improving our existing products while investing in new ones," Bloomberg Chairman Peter Grauer said in a statement in October when Lack was hired.

-- Meg James

Summit Entertainment and Lionsgate aren't getting hitched. At least not yet, if ever.

The idea has been broached, according to insiders, but nothing is cooking. Such a corporate marriage, were it to happen, would unite a suddenly hot movie production company with Hollywood's leading independent movie and TV studio, which is behind the "Saw" and "Tyler Perry" franchises.

So far, however, Summit has played hard to get.

A few weeks before the late November release of Summit's box office smash "Twilight," the company headed by Patrick Wachsberger and Rob Friedman, was approached by Lionsgate about a potential merger. Lionsgate, well aware of the teen vampire film's hot pre-release buzz, made an offer for Summit but was rebuffed because the price was too low.

Lionsgate and Summit, which are located right around the corner from each other in Santa Monica, say privately that there have been no formal talks since last fall. That's not to say that Lionsgate Chief Executive Jon Feltheimer and Summit's Friedman, who are golfing buddies, would never discuss it between rounds. Who knows?

After all, "Twilight," which was made for $37 million and grossed $341 million worldwide, is a highly prized new movie franchise, one that would fit nicely with Lionsgate's strategy of producing moderately budgeted movies targeted at a specific audience. The sequel, "New Moon," based on the second novel of author Stephenie Meyer's popular four-book series, is due in theaters Nov. 25 of this year. The first film's director, Catherine Hardwicke, dropped out for the next installment and was replaced by Chris Weitz, whose previous credits include "The Golden Compass" and "About a Boy."

"Twilight" put the nearly 2-year-old Summit on the Hollywood map. The start-up's first five releases included such box office flops as "Penelope," "Fly Me to the Moon" and "Sex Drive." Next up for the production and international sales company is "Push," a supernatural thriller with Dakota Fanning that opens Friday, and "Knowing," a mystery thriller starring Nicolas Cage, on March 20.

--Claudia Eller

Photos: Rob Friedman, left (Kevin Winter/Getty Images) and Jon Feltheimer (Vince Bucci/Getty Images)

To virtually no one's surprise, the Screen Actors Guild and the major studios announced late Wednesday that they will return to the negotiating table Tuesday to try to forge a new contract for actors.

The move comes only two days after SAG's board hired a new negotiator, John McGuire, and a new interim executive director, David White, following the ouster of Doug Allen. At the same time, the board formed a new "task force" to replace the previous negotating committee.

Moderates who orchestrated the shake-up are expected to move quickly to finalize a new contract, which will be modeled on deals secured over the past year by three other talent unions. Their challenge will be to obtain improvements over the studios' previous "final offer" that will be acceptable to members and demonstrate that the leadership didn't capitulate under pressure.

SAG members have been working without a contract since June 30.

-- Richard Verrier

Twentieth Century Fox has agreed to co-finance the third movie in the “Chronicles of Narnia” series, pending approval of the final script and shooting budget. If all goes as planned, Fox and Walden Media, which controls the movie rights to C.S. Lewis’ classic children's books, hope to begin production on "The Voyage of the Dawn Treader" by late summer so it will be ready for holiday 2010 release.

First, however, Fox and Walden have to hire a screenwriter to do another pass on the script that was last rewritten by Richard LaGravenese, whose credits include "Freedom Writers" and "The Horse Whisperer." The movie companies are looking to make the film for about $140 million. Michael Apted, who made "Amazing Grace" and the 1999 Bond flick "The World Is Not Enough," is on board to direct.

Fox is taking a financial gamble that Disney was unwilling to wage despite helping bankroll the first two films in the "Narnia" family franchise. Walden, owned by entrepreneur Phil Anschutz, was forced to seek a new financial partner on “Dawn Treader” after Disney balked at the cost and opted out.

Fox was the most likely partner because the studio already markets and distributes Walden movies under its Fox Walden label.

Over the last few weeks, Walden chief David Weil and “Narnia” producer Mark Johnson have held a series of meetings with top Fox executives, including movie chiefs Tom Rothman and Jim Gianopulos, to discuss script revisions and the movie's cost.

While the targeted budget of “Dawn Treader” is much lower than that of the last Narnia movie, “Prince Caspian,” which cost $225 million to produce, it's still a big gamble. Released by Disney last year, the sequel was much less popular than the first "Narnia" movie, “The Lion, the Witch and the Wardrobe.” The sequel grossed $419 million worldwide compared with its 2005 predecessor, which generated $745 million in ticket sales.

Disney and Walden hope that DVD sales of "Prince Caspian" will help pull the movie out of the red.

-- Claudia Eller

Photo: "The Chronicles of Narnia: Prince Caspian" is courtesy of Walt Disney Studios

Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.

The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies. 

A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.

A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Disney parks to reorganize, more positions to be eliminated

 

UPDATE: Disney says the reorganization will also create one group to identify "development opportunities" for the parks, not "acquisitions." The previous information was based on a statement erroneously provided by the company.

The Walt Disney Co. has announced a broad restructuring of its parks and resorts operation -- a move that sets the stage for more job cuts in the coming weeks.

The large-scale reorganization, which encompasses Disneyland, Disney World, cruise ships and resorts that it runs in places like Hilton Head, S.C., comes on the heels of last month's buyout package offers to 600 parks executives.

"These changes are essential to maintaining our leadership position in family tourism and reflect today's economic realities," Jay Rasulo, Parks chairman, said a statement.

Under the new structure, facets of Disneyland and Walt Disney World will be consolidated into a single domestic operation, to be headed by Worldwide Operations President Al Weiss.

Rasulo said the company would streamline its operating structure to simplify the operations -- and in the process, reduce overhead. He said the reorganization was a further step in an operational review begun in 2005 at Walt Disney Parks and Resorts, although he acknowledged that the bleak economy has accelerated the pace of the changes.

Disneyland Resort President Ed Grier and Walt Disney World Resort President Meg Crofton will continue to oversee the ride operations and other facets of customer attendance. However, Weiss' group will take over functions that cut across parks, such as procurement, menu planning and ordering stuffed animals.

The operations of Walt Disney Imagineering group will also be simplified. Chief Creative Executive Bruce Vaughn and Chief Design and Project Delivery Executive Craig Russell will continue to oversee the development of attractions for all Disney parks and resorts. But the group will no longer have separate groups devoted to development for resorts, entertainment and attractions.

A new global business development team will combine real estate development and business development under Executive Vice President Nick Franklin.

The changes are intended to streamline the organization and create one group that identifies possible acquisitions and park expansions, another that implements it and a third that is in charge of operations, company officials said.

The restructuring probably will result in job cuts, on top of the buyouts offered in January. It's unclear how many positions will be lost.

"Organization changes require difficult decisions, including the elimination of some roles," Rasulo said. "These decisions were not made lightly and we know this will be a challenging transition. The people affected are our friends and colleagues"

--Dawn C. Chmielewski

Photo credit: Timothy O'Rourke / Bloomberg News

CBS Corp., seeking to stave off a cash crunch and a downgrade its credit rating, slashed its dividend by more than 80% to 5 cents a share from 27 cents.

The broadcasting giant, releasing fourth-quarter results after the market closed, said net income plunged 52% to $136.1 million from $286.2 million in a year earlier.

Revenue was down a more modest 6% to $3.5 billion for the quarter compared with nearly $3.76 billion for the same period in 2007. The company attributed the lower top line to advertising weakness, partially offset by higher affiliate revenue from Internet media company CNet.

The dividend cut was even larger than Wall Street analysts had been expecting.

Chief Executive Leslie Moonves explained the reduction by pointing out that CBS had long been generous with its cash to investors but the economy now required the company to adjust its policy.

"CBS continues to produce strong cash flow, and we have returned $5.5 billion of that cash to shareholders in just three years as a stand-alone company," Moonves said. "However, by taking this step now, we will further strengthen our financial flexibility to meet our debt obligations even in difficult credit markets, and still provide our shareholders with an attractive dividend.”

Said CBS Executive Chairman Sumner Redstone, “We are clearly in the midst of one of the most difficult financial environments in history, with very little visibility on how long these economic conditions will continue or if there is worse to come."

Moonves, in a conference call with analysts, declined to give much guidance on the current first and upcoming second quarters. But he said he expected the second half of the year to be stronger for the company because CBS will have rerun revenue from the syndication of five TV shows "hitting the books" this fall.

-- Meg James

As the Screen Actors Guild and the major studios resumed contract negotiations today, Hollywood's below-the-line laborers wanted to deliver a message: "Let's get back to work."

About 100 film and TV workers, including cinematographers, studio drivers, makeup artists and prop makers, staged a rally this morning outside the Sherman Oaks headquarters of the Alliance of Motion Picture and Television Producers -- the negotiating arm of the studios -- urging the parties to "reach a speedy resolution to the current stalemate."

Rally organizers said their purpose was not to take a position on the contract dispute, but to convey a sense of urgency about how the continuing stalemate was creating hardships for entertainment industry workers.

"We decided we needed to be seen physically,'' said Ed Gutentag, a cinematographer and spokesman for the self-described "Let's Get Back to Work" coalition. "We're not taking sides, we just want to send a message that we're suffering by their inability to come up with a deal."

Actors have been working without a contract since June 30, creating an atmosphere of uncertainty that has contributed to a steep falloff in feature film production. The slowdown has been a double whammy for crew members, who were hit hard by the fallout from the 100-day writers strike last year.

Hope Parrish, a property master, says she hasn't worked in eight months, the longest stretch in her 29 years in the business. "Nobody is starting any projects,'' said Parrish, who worked on "The Curious Case of Benjamin Button." "I would like to see the producers negotiate a good deal with the actors so we can get back to work."

Many of the protestors belong to the International Alliance of Theatrical Stage Employees, which is grappling with its own contract issues with the studios. IATSE members are about to vote on a controversial contract that includes widely unpopular cuts in health benefits, including extending the number of hours members have to work to keep their health insurance benefits.

Also joining the rally were about 50 supporters from the Membership First faction at SAG, who've been at war with the union's board members over the firing of former executive director Doug Allen. Membership First fears the new negotiating team will capitulate to the studios, short-changing what actors earn from shows distributed on the Internet. In that spirit, they carried signs declaring, "SAG Board Sells Us Out Again" and "Vote No on Contract."

--Richard Verrier

So, here's a new twist on movie promotions.

20th Century Fox has produced a three-part trailer to promote its big-budget summer release "X-Men Orgins: Wolverine" that will run as separate 60-second spots beginning Sunday on the studio's TV shows "Family Guy," "House" and "American Idol."

Immediately after Tuesday's broadcast of the final "Wolverine" spot on "Idol," all three trailers — which together form a narrative — will appear on Yahoo.

The fourth "X-Men" movie, which debuts in theaters May 1, is one of this summer's most highly anticipated releases. The spinoff of the three earlier films, which have generated a total of $1.2 billion in worldwide ticket sales, traces the origins and transformation of the the mutant played by the humanly handsome Hugh Jackman into Wolverine. The studio is billing it as the first chapter in the X-Man saga that unites Wolverine with other legends in the X-Men character "universe."

Fox says the fourth installment of the Marvel Comics movie cost about $100 million. That would be considerably less than the cost of the 2006 sequel "X-Men: The Last Stand," which reportedly carried a price tag of more than $200 million. Why cheaper? For one, Jackman is the only major star in this "prequel." And Halle Berry, who appeared in the first three films, doesn't have a role. Nor was "Wolverine" directed by Brett Ratner, who made the last film, but rather Gavin Hood, who won the 2006 best foreign film Oscar for the low-budget crime drama "Tsotsi" and has never handled a big franchise picture.

— Claudia Eller

Photos from "Wolverine" courtesy of Fox

News Corp. Chief Executive Rupert Murdoch (above right) is in Los Angeles this week and next week to meet with top Fox executives on the West Coast.

Murdoch's presence, and his scrutiny of the company's entertainment businesses, has prompted increased speculation that Peter Chernin (above left), president and chief operating officer of News Corp., actually might be leaving the company after 20 years.  Chernin's contract expires in June.  Chernin has been particularly tight-lipped about his plans, fueling anxiety among Fox executives who want to keep Chernin, who is admired by both Wall Street and Hollywood power players.

Chernin declined to comment.

Murdoch flew into Los Angeles from Australia this week after celebrating the 100th birthday of his mother, Dame Elisabeth Murdoch, along with about 600 friends. The 77-year-old Murdoch is fond of saying that his mum's longevity bodes well for his own prospects of remaining at the helm of News Corp. for many more years.

Succession issues have bedeviled the company because Murdoch wants one of his children (he has six) to eventually run the global media empire that includes the 20th Century Fox film studio, Fox Broadcasting network, cable television outlets that include Fox News Channel, social network MySpace and a string of newspapers that includes his recently acquired jewel, The Wall Street Journal. 

Some on Wall Street worry that Murdoch's kids are not ready to manage the sprawling businesses that generated $33 billion in revenue last fiscal year. What's more, it would be a particularly awkward time for a major executive transition because the recession has hammered media companies that depend on advertising and consumer spending for such non-essential purchases as DVDs.

Last week, News Corp. reported a $6.4-billion loss for the quarter ended Dec. 31. Its stock is down 65% from a 52-week high of $20.49. 

During a conference call with analysts to discuss the results, Chernin seemed to play a less prominent role than he has in the past. Murdoch dominated the session, fielding questions about the entertainment properties that have long been Chernin's specialty.

Then there was the sticky issue of Chernin's contract.

Back during November's earnings call, when Murdoch and Chernin were asked to characterize the negotiations, Chernin called them "constructive." Murdoch quickly jumped in:  "I would characterize them as constructive and friendly."

But last week, the same question prompted a more measured response. "Peter and I are continuing our conversations and they're private and that is all there is to it," Murdoch said.  "Nothing more for me to say and we won't take any further questions on that. It is a confidential matter."

Chernin remained silent.

Murdoch's tour through Los Angeles is part of a strategic review of the company's businesses that takes place every three years, say people familiar with the situation who did not want to be identified in discussing the sensitive subject. Murdoch will hold two more weeks of meetings with top Fox executives this month in New York.

If Chernin were to leave News Corp., he would be available to step into the top job at any number of troubled media companies, of which there appears to be no shortage.

People close to Chernin said it would be hasty to draw a conclusion about Chernin's tenure and Murdoch's visit (the CEO comes here more often than people think, they said). Chernin, 57, has been known to take his employment negotiations down to the wire.  His last contract renewal, in July 2004, was announced three days before the new agreement went into effect.

— Dawn C. Chmielewski and Meg James   

Photo: Daniel Acker/Bloomberg News

Billionaire Sumner Redstone, who has been under pressure to restructure his family company's $1.6 billion in debt, said this morning that "substantial progress" had been made in talks with banks.

"An agreement is now within reach," the 85-year-old Redstone said during a conference call to discuss Viacom Inc.'s  quarterly earnings.

In October, Redstone got caught in the stock-market avalanche, which created a credit crisis for the mogul, who owns controlling stakes in Viacom -- which owns MTV, Nickelodeon, Comedy Central and Paramount Pictures movie studio -- and television and radio broadcasting behemoth CBS Corp.

His family company, National Amusements Inc., was forced to sell non-voting shares in Viacom and CBS at record-low prices to come up with cash to satisfy bankers after National Amusements defaulted on bank loans.   Since late last fall, National Amusements -- led by Redstone's daughter, Shari Redstone -- has been working closely with banks to restructure the company's debt. 

A December deadline for National Amusements to repay $800 million in bank loans was extended into this year, a signal that the elder Redstone might be able to pull off his high-wire credit act and save his media empire. In December, National Amusements jettisoned its ailing video-game company and said that it would sell some of its movie theaters to pay down debt.

Redstone did not say when he expected an agreement would be reached, and he declined to answer questions.  However, two people close to National Amusements said this week that a deal could come within the the next few weeks.

-- Meg James

DreamWorks Animation Chief Executive Jeffrey Katzenberg made a mea culpa on Wednesday, saying that the Motion Picture & Television Fund had done a poor job of communicating the reasons for its decision to close the hospital and nursing home.

"We give ourselves a failing grade,"  said Katzenberg, who chairs the charity's fundraising board. "This has not been communicated well."

But Katzenberg and other board members stood by their decision, describing it as a necessary move to preserve the viability of the organization and its various other programs, which includes six healthcare centers, child care services and a retirement community in Woodland Hills with 215 residents.

"We have made a decision that allows this incredibly important enterprise to live on and have a great future," he said during a conference call with reporters, aimed at quelling fury among the residents' family members who are angry over the facility's closure.

David Tillman, the fund's CEO, said there was a $20-million gap between program revenues and the cost of services that was projected to widen because of rising medical costs and declining reimbursements from the government. In the past, he said, the fund could rely on investment income and philanthropy to make up the shortfall, but that option is no longer possible because of the deep recession.

Frank Mancuso, chairman of the fund's corporate board, said that the board had already taken various steps to stem losses, including closing the hospital's costly intensive care unit, but had run out of options. "We left no stone unturned," he said.

-- Richard Verrier

While several of Hollywood's financially strained independent production companies have either gone under or drastically scaled back operations over the past year, Fred Smith -- the founder and chief executive of FedEx Corp. -- says he's still committed to his side business: investing in movies.

For more than a decade, the Hollywood outsider who lives in Memphis, Tenn., has quietly bankrolled Alcon Entertainment, the boutique production outfit behind such films as "My Dog Skip" and "The Sisterhood of the Traveling Pants" series. His company may not be known for any blockbuster success and has had some box-office losers like the romantic comedy "Chasing Liberty" and its debut movie, "Lost & Found." But Smith claims that, thanks to solid performers such as the romantic drama "P.S. I Love You," starring Hilary Swank and Gerald Butler, and continued financial discipline, Alcon has been a profitable venture.

He attributes the company's stamina in what he readily acknowledges is "a very tough business" to the cost-conscious "no-limos" philosophy guiding Alcon's two chief executives, Andrew Kosove and Broderick Johnson. Despite being a Yalie, Smith hired the two Princeton alums after meeting them in 1994 and being impressed with their 220-page business plan for launching a movie company.

Smith said the duo's success lies in the fact that the pair has stuck to their original strategy for lowering risks inherent to the unpredictable movie business: Keep film budgets tight and overhead low; focus on specific genres like family films; and have a strong studio partner to help market and distribute the pictures (Alcon has a multi-year distribution deal with Warner Bros. and typically sells off the international rights in its films to help finance them).

"Those three things have proven that we're the exception to the rule," Smith said when he dropped by The Times to talk about the toll that the bad economy is taking on his main business --delivering packages.

Smith ducked a question about how much of his own money he's invested in the movie business. "It's mostly been done with borrowed money," he says, noting Alcon's good fortune last year in securing a $500-million bank loan before those kind of "slate-financing" deals dried up. Smith says he used his own FedEx stock to secure the loan.

The entrepreneur, who leaves the day-to-day running of Alcon to his two movie chiefs, says he reads the occasional script and rarely visits the set of his company's movies.

His personal Alcon favorite? Smith says its Jay Russell's family movie, "My Dog Skip," based on Willie Morris' World War II memoir about a boy and his dog growing up in a small Southern town. Made for $7 million, the 2000 release grossed $35 million at the worldwide box office and did well on video. Smith said he defies anyone to watch the movie "without a tear in their eye."

Smith insists he doesn't regret his own failings as a would-be movie star. He jokes that any ambitions he may have harbored were "left on the cutting-room floor" when his three-minute cameo in Fox's 2000 "Cast Away," starring Tom Hanks as a FedEx executive in a modern-day version of Robinson Crusoe, was "so bad, so atrocious, it was cut to 18 seconds."

--Claudia Eller

Steven Spielberg's DreamWorks finalized a distribution deal with Disney today, giving the filmmaker key financial demands he failed to extract from his longtime studio alley Universal Pictures: a commitment to risk hundreds of millions in film prints and advertising costs and to share its valuable pay TV slots.

As part of the deal, Disney will also give DreamWorks -- which has been struggling to raise money for its new studio -- a cash advance of about $100 million and a potential $75-million credit line which Spielberg & Co. can draw on for future productions. Disney's total outlay of $175 million is taking the form of a loan and is not an equity investment.

But, here's the catch. While DreamWorks desperately needs the cash advance to get its slate of movies rolling, it can't access Disney's money until it raises the first phase of its debt financing -- $325 million -- which will trigger a matching equity investment by Spielberg's new studio partner India's Reliance Entertainment.

"Disney has given us all the support we need to be in a position to raise our money and launch our company," said Stacey Snider, partner and chief executive of DreamWorks.

DreamWorks initially hoped to close its bank financing by the the end of the first quarter, but that now appears to be unlikely. A person close to the matter said that a more realistic time frame is late April.

Spielberg and Reliance will continue to fund overhead at DreamWorks, which employs about 60 people, until the deal is completed.

Disney's distribution agreement calls for DreamWorks to deliver up to 30 movies over the term of the deal. DreamWorks hopes to make up to six films a year for Disney's Touchstone Films banner. The first release -- yet to be identified -- will be in 2010.

Disney will market and release the movies worldwide everywhere except India, where Mumbai-based Reliance retains the distribution rights.

The Burbank studio will advance all the prints and advertising costs in exchange for collecting a distribution fee of what could amount to as much as 10%.

DreamWorks will also be able to piggyback on Disney's pay cable deal with Starz Entertainment, which provides movie producers with a significant revenue stream worth hundreds of millions of dollars. Last year, DreamWorks had failed at an attempt to secure its own pay-TV deal with HBO.

Spielberg hooked up with Reliance last year in a 50-50 venture to relaunch DreamWorks as a new studio with hoped-for funding of $1.25 billion. Reliance agreed to match in equity what DreamWorks raises in debt, but those efforts have been greatly hampered by the global credit crisis.

Surprising news of a pending deal between DreamWorks and Disney came late last week after a previously announced agreement between the Spielberg studio and Universal Pictures fell apart. Last fall, Universal had beat Disney and other potential distributors to the punch by cinching the right to distribute DreamWorks new movies. But, as DreamWorks' attempts to raise all of its funding by early this year became derailed by the financial markets, Spielberg and Reliance put pressure on Universal to change the original terms of its distribution deal.

Among sticking points between Universal and DreamWorks was that Universal refused to put up hundreds of millions in funds for prints and ads of DreamWorks movies -- an extremely risky investment in the volatile film business. DreamWorks also wanted more movie slots from Universal's deal with HBO than the studio was able to provide.

-- Claudia Eller

Left photo: Steven Spielberg. Credit: Hector Mata / AFP

Right photo: Stacey Snider. Credit: Vince Bucci / Getty Images

Think of it as a repeat of the swearing-in of President Obama in "an excess of prudence."

The Screen Actors Guild board voted for a second time to oust former executive director Doug Allen and replace the union's negotiating committee with a newly appointed task force dominated by moderates.

The move was widely anticipated, given that the board had previously taken such a vote last month by means of a "written assent."

That action, however, was challenged in a lawsuit filed last week by SAG President Alan Rosenberg and three other directors. Rosenberg has been a staunch ally of Allen and had refused to accept the board's appointment of David White as interim executive director and John McGuire as SAG's new chief negotiator. Last week, a judge denied a request for a temporary restraining order, saying the board had acted within its rights.

Sunday's vote -- supported by 59% of the 71-member board -- delivers a further blow to Rosenberg's legal challenge, which had threatened to delay a resumption in long-stalled contract negotiations with the studios. Talks are expected to resume on Feb. 17.

-- Richard Verrier

DreamWorks' planned distribution deal with Universal Pictures has collapsed as the parties are unable to agree upon final terms.

The failure of the agreement paves the way for Walt Disney Studios, which had earlier sought a distribution deal with DreamWorks, to step in as Steven Spielberg's new studio home, according to people familiar with the situation.

DreamWorks has been struggling for months to raise funds for its new studio, but efforts to raise the debt portion of its desired $1.25 billion in financing has been hampered by the global credit crisis.

DreamWorks, which split from former owner Paramount Pictures last year, is in need of some serious cash to continue financing overhead and jump-start plans to make about six movies a year. Spielberg's businesss partner, India's Reliance Entertainment, will not put up the equity portion of the financing until DreamWorks secures a matching sum in debt. DreamWorks' lead bank, JPMorgan Chase, so far has received a commitment for less than half of the $325-million loan that Spielberg hopes to have by late March. At that point, Reliance would match the bank contribution. DreamWorks is seeking to raise a total of about $1.25 billion in equity and debt.

Reliance had been pressuring Universal to advance DreamWorks at least $150 million in interim financing. But Universal, which in October announced a multi-year distribution deal with DreamWorks, balked and this morning announced it had halted talks with DreamWorks. "Over the past several weeks DreamWorks has demanded material changes to previously agreed-upon terms. It is clear DreamWorks' needs and Universal's business interests are no longer in alignment," Universal said.

Disney, which had been one of several DreamWorks distribution suitors, is in talks with the Spielberg camp and apparently willing to step in and make the investment needed by the filmmaker. Disney has always been Plan B, although Spielberg's first choice was Universal, where he began his career. Spielberg's creative partner Stacey Snider, who runs DreamWorks, used to be chairwoman of Universal Pictures.

This is the second time that Universal let DreamWorks slip away over money issues. Before being sold to Paramount in 2006 for $1.6 billion, DreamWorks had been in serious negotiations with Universal. But at the eleventh hour, Universal lowered its acquisition offer and the deal fell apart.

-- Claudia Eller

UPDATED at 4:59 p.m.:  With a judge having denied a temporary restraining order sought by Screen Actors Guild President Alan Rosenberg, the major studios are expected  to resume contract negotiations with the union. Talks have been tentatively scheduled for Feb. 17 and 18, sources familiar with the talks say.

A judge rebuffed for the second time a bid by Screen Actors Guild President Alan Rosenberg to block the union's new negotiating team from reviving contract talks with the major studios.

Rosenberg and three other board members filed a lawsuit this week seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee. They maintained the vote, taken by means of a "written assent," violated the state's business laws and the union's own bylaws.

But Los Angeles Superior Court Judge James Chalfant denied the request for a temporary restraining order, ruling that the board's action complied with the state law governing corporations. He also rejected arguments by Rosenberg's attorneys that a two-third vote was required to disband the committee.

The judge's decision removes what would have been an embarrassing setback for SAG. A restraining order could have unseated the union's newly appointed interim executive director and chief negotiator. They were tapped by the board after it fired former Executive Director Doug Allen, contending he mishandled negotiations.

Nonetheless, Thursday's ruling, which didn't dismiss the overall case, doesn't end the uncertainty over when contract negotiations with the studios will resume. Actors have been without a contract since June 30, 2008. SAG postponed planned negotiating sessions earlier this week because of the fight with its union president. 

And it's unlikely studios would agree to return to the bargaining table as long as there is a pending lawsuit challenging the legitimacy of negotiations.

Eric George, attorney for Rosenberg and the other directors, said he would file an appeal in the next few days with the California Court of Appeal.

Ned Vaughn, spokesman for the Unite for Strength group that represents so-called moderate board members, hailed the judge's ruling and called on Rosenberg to drop his complaint.

"It's outrageous that this lawsuit has further delayed negotiations,'' he said. "It's time for Alan Rosenberg to drop this and accept that SAG members voted for change. They want it now."

Rosenberg, who attended Thursday's hearing, declined to comment.

Thursday's ruling marked a second setback for Rosenberg, whose initial appeal for an injunction was denied after the judge cited several technical errors in the complaint.

“I’m pleased that we can put this matter behind us and dedicate our complete focus to the needs of Screen Actors Guild members. There’s a lot of work ahead of us,” said SAG interim National Executive Director David White.

-- Richard Verrier

Is French media giant Vivendi souring on its investment in NBC Universal -- perhaps un petit peu?

Mais non, says Vivendi Chief Executive Jean-Bernard Levy.

Nonetheless, Vivendi plans to write down the value of its 20% stake in NBC Universal next month when the French company reports its quarterly earnings. For now, Vivendi won't discuss the amount of the anticipated noncash charge, which is necessary to reflect the lower valuation of the U.S. company that boasts the NBC broadcast network, cable channels USA Network, Bravo and MSNBC, and Universal Studios. 

General Electric Co., whose stock has been pummeled in the market meltdown, owns the controlling 80% of NBC Universal. When GE and Vivendi combined their entertainment properties in 2004 to create NBC Universal, the enterprise was valued at more than $40 billion, making Vivendi's portion worth around $8 billion. (GE reiterated Tuesday that it had no plans to reduce the value of NBC that it carries on its battered books.) 

"It's a tough environment, but we are very pleased with NBC," Levy said during an interview in Santa Monica. "We are pleased with the profits that NBC has achieved; the overall performance of NBC U has been very good." 

Vivendi had an opportunity in December to divest its stake in NBC Universal  -- but it chose not to. The timing was not right because of the U.S. media company's depressed trading multiples, Levy said. Vivendi intends to hang on to its interest until the market bounces back.

How long will Vivendi be part of the peacock company? Levy would not tip his hand other than to say, "We are not long-term owners." He added that his company prefers to be in the "driver's seat" of its investments, and that is not the case with NBC.

Still, Levy is a big fan of the guy behind the wheel, NBC Universal CEO Jeff Zucker.

"I like him very much, he is an excellent manager and he certainly knows his business," Levy said of Zucker. The two CEOs spent time together last weekend in Tampa, where they attended the Super Bowl, which was televised by NBC and generated huge ratings.

Levy now is expecting Zucker to make similar gains in the financial field. "We are happy that we will share in the potential value creation that he and his team will implement," Levy said.

-- Meg James

Photo of Vivendi CEO Jean-Bernard Levy by Alex Pham/Los Angeles Times

A judge on Tuesday denied a temporary restraining order sought by SAG President Alan Rosenberg to block negotiations between the union and the major studios.

Rosenberg and three other board members are seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee, contending that the action violated the state's corporate code.

But Los Angeles Superior Court Judge James Chalfant denied the request for an injunction, citing several technical errors in the lawsuit, and ordered that the complaint be resubmitted. A hearing on the case will be held Thursday. The litigation has delayed contract negotiations that were set to resume this week.

"They are so desperate to hold on to their power that they are willing to burn down their own house,'' said New York SAG President Sam Freed, one of the board members being sued. Rosenberg declined to comment.

-- Richard Verrier

Financial news network Bloomberg Television today pulled the plug on its "Night Talk" program and bid goodbye to longtime anchor Mike Schneider.

Schneider's last program was Monday night.

Additional staff cuts and TV programming lineup changes are expected to be announced Wednesday. The moves are part of broad restructuring of the multimedia group, which includes Bloomberg Television and Bloomberg Radio, a person familiar with the situation said.

The private company, founded by New York Mayor Michael Bloomberg, generates about $6 billion a year in revenue.

But the shuffle has already begun. Bloomberg Television Managing Editor John Meehan left the company last week. His departure comes four months after former NBC, CBS and Sony BMG Music executive Andy Lack was hired to manage Bloomberg's television and radio operations. Lack brought in David Rhodes from the Fox News Channel to run the television operations.

Bloomberg operates 24 hours a day and has TV channels in 11 countries, but its sprawling operations are seen as disjointed and not making full use of its team of reporters in 143 bureaus around the world.

Although the company plans to eliminate programs and trim employees, it plans to hire additional staff this year to improve its programming to better position the company for growth, said the person familiar with the situation.

"While other news organizations are shrinking, we continue to expand, improving our existing products while investing in new ones," Bloomberg Chairman Peter Grauer said in a statement in October when Lack was hired.

-- Meg James

Summit Entertainment and Lionsgate aren't getting hitched. At least not yet, if ever.

The idea has been broached, according to insiders, but nothing is cooking. Such a corporate marriage, were it to happen, would unite a suddenly hot movie production company with Hollywood's leading independent movie and TV studio, which is behind the "Saw" and "Tyler Perry" franchises.

So far, however, Summit has played hard to get.

A few weeks before the late November release of Summit's box office smash "Twilight," the company headed by Patrick Wachsberger and Rob Friedman, was approached by Lionsgate about a potential merger. Lionsgate, well aware of the teen vampire film's hot pre-release buzz, made an offer for Summit but was rebuffed because the price was too low.

Lionsgate and Summit, which are located right around the corner from each other in Santa Monica, say privately that there have been no formal talks since last fall. That's not to say that Lionsgate Chief Executive Jon Feltheimer and Summit's Friedman, who are golfing buddies, would never discuss it between rounds. Who knows?

After all, "Twilight," which was made for $37 million and grossed $341 million worldwide, is a highly prized new movie franchise, one that would fit nicely with Lionsgate's strategy of producing moderately budgeted movies targeted at a specific audience. The sequel, "New Moon," based on the second novel of author Stephenie Meyer's popular four-book series, is due in theaters Nov. 25 of this year. The first film's director, Catherine Hardwicke, dropped out for the next installment and was replaced by Chris Weitz, whose previous credits include "The Golden Compass" and "About a Boy."

"Twilight" put the nearly 2-year-old Summit on the Hollywood map. The start-up's first five releases included such box office flops as "Penelope," "Fly Me to the Moon" and "Sex Drive." Next up for the production and international sales company is "Push," a supernatural thriller with Dakota Fanning that opens Friday, and "Knowing," a mystery thriller starring Nicolas Cage, on March 20.

--Claudia Eller

Photos: Rob Friedman, left (Kevin Winter/Getty Images) and Jon Feltheimer (Vince Bucci/Getty Images)

To virtually no one's surprise, the Screen Actors Guild and the major studios announced late Wednesday that they will return to the negotiating table Tuesday to try to forge a new contract for actors.

The move comes only two days after SAG's board hired a new negotiator, John McGuire, and a new interim executive director, David White, following the ouster of Doug Allen. At the same time, the board formed a new "task force" to replace the previous negotating committee.

Moderates who orchestrated the shake-up are expected to move quickly to finalize a new contract, which will be modeled on deals secured over the past year by three other talent unions. Their challenge will be to obtain improvements over the studios' previous "final offer" that will be acceptable to members and demonstrate that the leadership didn't capitulate under pressure.

SAG members have been working without a contract since June 30.

-- Richard Verrier

Twentieth Century Fox has agreed to co-finance the third movie in the “Chronicles of Narnia” series, pending approval of the final script and shooting budget. If all goes as planned, Fox and Walden Media, which controls the movie rights to C.S. Lewis’ classic children's books, hope to begin production on "The Voyage of the Dawn Treader" by late summer so it will be ready for holiday 2010 release.

First, however, Fox and Walden have to hire a screenwriter to do another pass on the script that was last rewritten by Richard LaGravenese, whose credits include "Freedom Writers" and "The Horse Whisperer." The movie companies are looking to make the film for about $140 million. Michael Apted, who made "Amazing Grace" and the 1999 Bond flick "The World Is Not Enough," is on board to direct.

Fox is taking a financial gamble that Disney was unwilling to wage despite helping bankroll the first two films in the "Narnia" family franchise. Walden, owned by entrepreneur Phil Anschutz, was forced to seek a new financial partner on “Dawn Treader” after Disney balked at the cost and opted out.

Fox was the most likely partner because the studio already markets and distributes Walden movies under its Fox Walden label.

Over the last few weeks, Walden chief David Weil and “Narnia” producer Mark Johnson have held a series of meetings with top Fox executives, including movie chiefs Tom Rothman and Jim Gianopulos, to discuss script revisions and the movie's cost.

While the targeted budget of “Dawn Treader” is much lower than that of the last Narnia movie, “Prince Caspian,” which cost $225 million to produce, it's still a big gamble. Released by Disney last year, the sequel was much less popular than the first "Narnia" movie, “The Lion, the Witch and the Wardrobe.” The sequel grossed $419 million worldwide compared with its 2005 predecessor, which generated $745 million in ticket sales.

Disney and Walden hope that DVD sales of "Prince Caspian" will help pull the movie out of the red.

-- Claudia Eller

Photo: "The Chronicles of Narnia: Prince Caspian" is courtesy of Walt Disney Studios

Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.

The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies. 

A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.

A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

CBS slashes dividend by more than 80%; net income plunges on weaker ad sales

CBS Corp., seeking to stave off a cash crunch and a downgrade its credit rating, slashed its dividend by more than 80% to 5 cents a share from 27 cents.

The broadcasting giant, releasing fourth-quarter results after the market closed, said net income plunged 52% to $136.1 million from $286.2 million in a year earlier.

Revenue was down a more modest 6% to $3.5 billion for the quarter compared with nearly $3.76 billion for the same period in 2007. The company attributed the lower top line to advertising weakness, partially offset by higher affiliate revenue from Internet media company CNet.

The dividend cut was even larger than Wall Street analysts had been expecting.

Chief Executive Leslie Moonves explained the reduction by pointing out that CBS had long been generous with its cash to investors but the economy now required the company to adjust its policy.

"CBS continues to produce strong cash flow, and we have returned $5.5 billion of that cash to shareholders in just three years as a stand-alone company," Moonves said. "However, by taking this step now, we will further strengthen our financial flexibility to meet our debt obligations even in difficult credit markets, and still provide our shareholders with an attractive dividend.”

Said CBS Executive Chairman Sumner Redstone, “We are clearly in the midst of one of the most difficult financial environments in history, with very little visibility on how long these economic conditions will continue or if there is worse to come."

Moonves, in a conference call with analysts, declined to give much guidance on the current first and upcoming second quarters. But he said he expected the second half of the year to be stronger for the company because CBS will have rerun revenue from the syndication of five TV shows "hitting the books" this fall.

-- Meg James

As the Screen Actors Guild and the major studios resumed contract negotiations today, Hollywood's below-the-line laborers wanted to deliver a message: "Let's get back to work."

About 100 film and TV workers, including cinematographers, studio drivers, makeup artists and prop makers, staged a rally this morning outside the Sherman Oaks headquarters of the Alliance of Motion Picture and Television Producers -- the negotiating arm of the studios -- urging the parties to "reach a speedy resolution to the current stalemate."

Rally organizers said their purpose was not to take a position on the contract dispute, but to convey a sense of urgency about how the continuing stalemate was creating hardships for entertainment industry workers.

"We decided we needed to be seen physically,'' said Ed Gutentag, a cinematographer and spokesman for the self-described "Let's Get Back to Work" coalition. "We're not taking sides, we just want to send a message that we're suffering by their inability to come up with a deal."

Actors have been working without a contract since June 30, creating an atmosphere of uncertainty that has contributed to a steep falloff in feature film production. The slowdown has been a double whammy for crew members, who were hit hard by the fallout from the 100-day writers strike last year.

Hope Parrish, a property master, says she hasn't worked in eight months, the longest stretch in her 29 years in the business. "Nobody is starting any projects,'' said Parrish, who worked on "The Curious Case of Benjamin Button." "I would like to see the producers negotiate a good deal with the actors so we can get back to work."

Many of the protestors belong to the International Alliance of Theatrical Stage Employees, which is grappling with its own contract issues with the studios. IATSE members are about to vote on a controversial contract that includes widely unpopular cuts in health benefits, including extending the number of hours members have to work to keep their health insurance benefits.

Also joining the rally were about 50 supporters from the Membership First faction at SAG, who've been at war with the union's board members over the firing of former executive director Doug Allen. Membership First fears the new negotiating team will capitulate to the studios, short-changing what actors earn from shows distributed on the Internet. In that spirit, they carried signs declaring, "SAG Board Sells Us Out Again" and "Vote No on Contract."

--Richard Verrier

So, here's a new twist on movie promotions.

20th Century Fox has produced a three-part trailer to promote its big-budget summer release "X-Men Orgins: Wolverine" that will run as separate 60-second spots beginning Sunday on the studio's TV shows "Family Guy," "House" and "American Idol."

Immediately after Tuesday's broadcast of the final "Wolverine" spot on "Idol," all three trailers — which together form a narrative — will appear on Yahoo.

The fourth "X-Men" movie, which debuts in theaters May 1, is one of this summer's most highly anticipated releases. The spinoff of the three earlier films, which have generated a total of $1.2 billion in worldwide ticket sales, traces the origins and transformation of the the mutant played by the humanly handsome Hugh Jackman into Wolverine. The studio is billing it as the first chapter in the X-Man saga that unites Wolverine with other legends in the X-Men character "universe."

Fox says the fourth installment of the Marvel Comics movie cost about $100 million. That would be considerably less than the cost of the 2006 sequel "X-Men: The Last Stand," which reportedly carried a price tag of more than $200 million. Why cheaper? For one, Jackman is the only major star in this "prequel." And Halle Berry, who appeared in the first three films, doesn't have a role. Nor was "Wolverine" directed by Brett Ratner, who made the last film, but rather Gavin Hood, who won the 2006 best foreign film Oscar for the low-budget crime drama "Tsotsi" and has never handled a big franchise picture.

— Claudia Eller

Photos from "Wolverine" courtesy of Fox

News Corp. Chief Executive Rupert Murdoch (above right) is in Los Angeles this week and next week to meet with top Fox executives on the West Coast.

Murdoch's presence, and his scrutiny of the company's entertainment businesses, has prompted increased speculation that Peter Chernin (above left), president and chief operating officer of News Corp., actually might be leaving the company after 20 years.  Chernin's contract expires in June.  Chernin has been particularly tight-lipped about his plans, fueling anxiety among Fox executives who want to keep Chernin, who is admired by both Wall Street and Hollywood power players.

Chernin declined to comment.

Murdoch flew into Los Angeles from Australia this week after celebrating the 100th birthday of his mother, Dame Elisabeth Murdoch, along with about 600 friends. The 77-year-old Murdoch is fond of saying that his mum's longevity bodes well for his own prospects of remaining at the helm of News Corp. for many more years.

Succession issues have bedeviled the company because Murdoch wants one of his children (he has six) to eventually run the global media empire that includes the 20th Century Fox film studio, Fox Broadcasting network, cable television outlets that include Fox News Channel, social network MySpace and a string of newspapers that includes his recently acquired jewel, The Wall Street Journal. 

Some on Wall Street worry that Murdoch's kids are not ready to manage the sprawling businesses that generated $33 billion in revenue last fiscal year. What's more, it would be a particularly awkward time for a major executive transition because the recession has hammered media companies that depend on advertising and consumer spending for such non-essential purchases as DVDs.

Last week, News Corp. reported a $6.4-billion loss for the quarter ended Dec. 31. Its stock is down 65% from a 52-week high of $20.49. 

During a conference call with analysts to discuss the results, Chernin seemed to play a less prominent role than he has in the past. Murdoch dominated the session, fielding questions about the entertainment properties that have long been Chernin's specialty.

Then there was the sticky issue of Chernin's contract.

Back during November's earnings call, when Murdoch and Chernin were asked to characterize the negotiations, Chernin called them "constructive." Murdoch quickly jumped in:  "I would characterize them as constructive and friendly."

But last week, the same question prompted a more measured response. "Peter and I are continuing our conversations and they're private and that is all there is to it," Murdoch said.  "Nothing more for me to say and we won't take any further questions on that. It is a confidential matter."

Chernin remained silent.

Murdoch's tour through Los Angeles is part of a strategic review of the company's businesses that takes place every three years, say people familiar with the situation who did not want to be identified in discussing the sensitive subject. Murdoch will hold two more weeks of meetings with top Fox executives this month in New York.

If Chernin were to leave News Corp., he would be available to step into the top job at any number of troubled media companies, of which there appears to be no shortage.

People close to Chernin said it would be hasty to draw a conclusion about Chernin's tenure and Murdoch's visit (the CEO comes here more often than people think, they said). Chernin, 57, has been known to take his employment negotiations down to the wire.  His last contract renewal, in July 2004, was announced three days before the new agreement went into effect.

— Dawn C. Chmielewski and Meg James   

Photo: Daniel Acker/Bloomberg News

Billionaire Sumner Redstone, who has been under pressure to restructure his family company's $1.6 billion in debt, said this morning that "substantial progress" had been made in talks with banks.

"An agreement is now within reach," the 85-year-old Redstone said during a conference call to discuss Viacom Inc.'s  quarterly earnings.

In October, Redstone got caught in the stock-market avalanche, which created a credit crisis for the mogul, who owns controlling stakes in Viacom -- which owns MTV, Nickelodeon, Comedy Central and Paramount Pictures movie studio -- and television and radio broadcasting behemoth CBS Corp.

His family company, National Amusements Inc., was forced to sell non-voting shares in Viacom and CBS at record-low prices to come up with cash to satisfy bankers after National Amusements defaulted on bank loans.   Since late last fall, National Amusements -- led by Redstone's daughter, Shari Redstone -- has been working closely with banks to restructure the company's debt. 

A December deadline for National Amusements to repay $800 million in bank loans was extended into this year, a signal that the elder Redstone might be able to pull off his high-wire credit act and save his media empire. In December, National Amusements jettisoned its ailing video-game company and said that it would sell some of its movie theaters to pay down debt.

Redstone did not say when he expected an agreement would be reached, and he declined to answer questions.  However, two people close to National Amusements said this week that a deal could come within the the next few weeks.

-- Meg James

DreamWorks Animation Chief Executive Jeffrey Katzenberg made a mea culpa on Wednesday, saying that the Motion Picture & Television Fund had done a poor job of communicating the reasons for its decision to close the hospital and nursing home.

"We give ourselves a failing grade,"  said Katzenberg, who chairs the charity's fundraising board. "This has not been communicated well."

But Katzenberg and other board members stood by their decision, describing it as a necessary move to preserve the viability of the organization and its various other programs, which includes six healthcare centers, child care services and a retirement community in Woodland Hills with 215 residents.

"We have made a decision that allows this incredibly important enterprise to live on and have a great future," he said during a conference call with reporters, aimed at quelling fury among the residents' family members who are angry over the facility's closure.

David Tillman, the fund's CEO, said there was a $20-million gap between program revenues and the cost of services that was projected to widen because of rising medical costs and declining reimbursements from the government. In the past, he said, the fund could rely on investment income and philanthropy to make up the shortfall, but that option is no longer possible because of the deep recession.

Frank Mancuso, chairman of the fund's corporate board, said that the board had already taken various steps to stem losses, including closing the hospital's costly intensive care unit, but had run out of options. "We left no stone unturned," he said.

-- Richard Verrier

While several of Hollywood's financially strained independent production companies have either gone under or drastically scaled back operations over the past year, Fred Smith -- the founder and chief executive of FedEx Corp. -- says he's still committed to his side business: investing in movies.

For more than a decade, the Hollywood outsider who lives in Memphis, Tenn., has quietly bankrolled Alcon Entertainment, the boutique production outfit behind such films as "My Dog Skip" and "The Sisterhood of the Traveling Pants" series. His company may not be known for any blockbuster success and has had some box-office losers like the romantic comedy "Chasing Liberty" and its debut movie, "Lost & Found." But Smith claims that, thanks to solid performers such as the romantic drama "P.S. I Love You," starring Hilary Swank and Gerald Butler, and continued financial discipline, Alcon has been a profitable venture.

He attributes the company's stamina in what he readily acknowledges is "a very tough business" to the cost-conscious "no-limos" philosophy guiding Alcon's two chief executives, Andrew Kosove and Broderick Johnson. Despite being a Yalie, Smith hired the two Princeton alums after meeting them in 1994 and being impressed with their 220-page business plan for launching a movie company.

Smith said the duo's success lies in the fact that the pair has stuck to their original strategy for lowering risks inherent to the unpredictable movie business: Keep film budgets tight and overhead low; focus on specific genres like family films; and have a strong studio partner to help market and distribute the pictures (Alcon has a multi-year distribution deal with Warner Bros. and typically sells off the international rights in its films to help finance them).

"Those three things have proven that we're the exception to the rule," Smith said when he dropped by The Times to talk about the toll that the bad economy is taking on his main business --delivering packages.

Smith ducked a question about how much of his own money he's invested in the movie business. "It's mostly been done with borrowed money," he says, noting Alcon's good fortune last year in securing a $500-million bank loan before those kind of "slate-financing" deals dried up. Smith says he used his own FedEx stock to secure the loan.

The entrepreneur, who leaves the day-to-day running of Alcon to his two movie chiefs, says he reads the occasional script and rarely visits the set of his company's movies.

His personal Alcon favorite? Smith says its Jay Russell's family movie, "My Dog Skip," based on Willie Morris' World War II memoir about a boy and his dog growing up in a small Southern town. Made for $7 million, the 2000 release grossed $35 million at the worldwide box office and did well on video. Smith said he defies anyone to watch the movie "without a tear in their eye."

Smith insists he doesn't regret his own failings as a would-be movie star. He jokes that any ambitions he may have harbored were "left on the cutting-room floor" when his three-minute cameo in Fox's 2000 "Cast Away," starring Tom Hanks as a FedEx executive in a modern-day version of Robinson Crusoe, was "so bad, so atrocious, it was cut to 18 seconds."

--Claudia Eller

Steven Spielberg's DreamWorks finalized a distribution deal with Disney today, giving the filmmaker key financial demands he failed to extract from his longtime studio alley Universal Pictures: a commitment to risk hundreds of millions in film prints and advertising costs and to share its valuable pay TV slots.

As part of the deal, Disney will also give DreamWorks -- which has been struggling to raise money for its new studio -- a cash advance of about $100 million and a potential $75-million credit line which Spielberg & Co. can draw on for future productions. Disney's total outlay of $175 million is taking the form of a loan and is not an equity investment.

But, here's the catch. While DreamWorks desperately needs the cash advance to get its slate of movies rolling, it can't access Disney's money until it raises the first phase of its debt financing -- $325 million -- which will trigger a matching equity investment by Spielberg's new studio partner India's Reliance Entertainment.

"Disney has given us all the support we need to be in a position to raise our money and launch our company," said Stacey Snider, partner and chief executive of DreamWorks.

DreamWorks initially hoped to close its bank financing by the the end of the first quarter, but that now appears to be unlikely. A person close to the matter said that a more realistic time frame is late April.

Spielberg and Reliance will continue to fund overhead at DreamWorks, which employs about 60 people, until the deal is completed.

Disney's distribution agreement calls for DreamWorks to deliver up to 30 movies over the term of the deal. DreamWorks hopes to make up to six films a year for Disney's Touchstone Films banner. The first release -- yet to be identified -- will be in 2010.

Disney will market and release the movies worldwide everywhere except India, where Mumbai-based Reliance retains the distribution rights.

The Burbank studio will advance all the prints and advertising costs in exchange for collecting a distribution fee of what could amount to as much as 10%.

DreamWorks will also be able to piggyback on Disney's pay cable deal with Starz Entertainment, which provides movie producers with a significant revenue stream worth hundreds of millions of dollars. Last year, DreamWorks had failed at an attempt to secure its own pay-TV deal with HBO.

Spielberg hooked up with Reliance last year in a 50-50 venture to relaunch DreamWorks as a new studio with hoped-for funding of $1.25 billion. Reliance agreed to match in equity what DreamWorks raises in debt, but those efforts have been greatly hampered by the global credit crisis.

Surprising news of a pending deal between DreamWorks and Disney came late last week after a previously announced agreement between the Spielberg studio and Universal Pictures fell apart. Last fall, Universal had beat Disney and other potential distributors to the punch by cinching the right to distribute DreamWorks new movies. But, as DreamWorks' attempts to raise all of its funding by early this year became derailed by the financial markets, Spielberg and Reliance put pressure on Universal to change the original terms of its distribution deal.

Among sticking points between Universal and DreamWorks was that Universal refused to put up hundreds of millions in funds for prints and ads of DreamWorks movies -- an extremely risky investment in the volatile film business. DreamWorks also wanted more movie slots from Universal's deal with HBO than the studio was able to provide.

-- Claudia Eller

Left photo: Steven Spielberg. Credit: Hector Mata / AFP

Right photo: Stacey Snider. Credit: Vince Bucci / Getty Images

Think of it as a repeat of the swearing-in of President Obama in "an excess of prudence."

The Screen Actors Guild board voted for a second time to oust former executive director Doug Allen and replace the union's negotiating committee with a newly appointed task force dominated by moderates.

The move was widely anticipated, given that the board had previously taken such a vote last month by means of a "written assent."

That action, however, was challenged in a lawsuit filed last week by SAG President Alan Rosenberg and three other directors. Rosenberg has been a staunch ally of Allen and had refused to accept the board's appointment of David White as interim executive director and John McGuire as SAG's new chief negotiator. Last week, a judge denied a request for a temporary restraining order, saying the board had acted within its rights.

Sunday's vote -- supported by 59% of the 71-member board -- delivers a further blow to Rosenberg's legal challenge, which had threatened to delay a resumption in long-stalled contract negotiations with the studios. Talks are expected to resume on Feb. 17.

-- Richard Verrier

DreamWorks' planned distribution deal with Universal Pictures has collapsed as the parties are unable to agree upon final terms.

The failure of the agreement paves the way for Walt Disney Studios, which had earlier sought a distribution deal with DreamWorks, to step in as Steven Spielberg's new studio home, according to people familiar with the situation.

DreamWorks has been struggling for months to raise funds for its new studio, but efforts to raise the debt portion of its desired $1.25 billion in financing has been hampered by the global credit crisis.

DreamWorks, which split from former owner Paramount Pictures last year, is in need of some serious cash to continue financing overhead and jump-start plans to make about six movies a year. Spielberg's businesss partner, India's Reliance Entertainment, will not put up the equity portion of the financing until DreamWorks secures a matching sum in debt. DreamWorks' lead bank, JPMorgan Chase, so far has received a commitment for less than half of the $325-million loan that Spielberg hopes to have by late March. At that point, Reliance would match the bank contribution. DreamWorks is seeking to raise a total of about $1.25 billion in equity and debt.

Reliance had been pressuring Universal to advance DreamWorks at least $150 million in interim financing. But Universal, which in October announced a multi-year distribution deal with DreamWorks, balked and this morning announced it had halted talks with DreamWorks. "Over the past several weeks DreamWorks has demanded material changes to previously agreed-upon terms. It is clear DreamWorks' needs and Universal's business interests are no longer in alignment," Universal said.

Disney, which had been one of several DreamWorks distribution suitors, is in talks with the Spielberg camp and apparently willing to step in and make the investment needed by the filmmaker. Disney has always been Plan B, although Spielberg's first choice was Universal, where he began his career. Spielberg's creative partner Stacey Snider, who runs DreamWorks, used to be chairwoman of Universal Pictures.

This is the second time that Universal let DreamWorks slip away over money issues. Before being sold to Paramount in 2006 for $1.6 billion, DreamWorks had been in serious negotiations with Universal. But at the eleventh hour, Universal lowered its acquisition offer and the deal fell apart.

-- Claudia Eller

UPDATED at 4:59 p.m.:  With a judge having denied a temporary restraining order sought by Screen Actors Guild President Alan Rosenberg, the major studios are expected  to resume contract negotiations with the union. Talks have been tentatively scheduled for Feb. 17 and 18, sources familiar with the talks say.

A judge rebuffed for the second time a bid by Screen Actors Guild President Alan Rosenberg to block the union's new negotiating team from reviving contract talks with the major studios.

Rosenberg and three other board members filed a lawsuit this week seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee. They maintained the vote, taken by means of a "written assent," violated the state's business laws and the union's own bylaws.

But Los Angeles Superior Court Judge James Chalfant denied the request for a temporary restraining order, ruling that the board's action complied with the state law governing corporations. He also rejected arguments by Rosenberg's attorneys that a two-third vote was required to disband the committee.

The judge's decision removes what would have been an embarrassing setback for SAG. A restraining order could have unseated the union's newly appointed interim executive director and chief negotiator. They were tapped by the board after it fired former Executive Director Doug Allen, contending he mishandled negotiations.

Nonetheless, Thursday's ruling, which didn't dismiss the overall case, doesn't end the uncertainty over when contract negotiations with the studios will resume. Actors have been without a contract since June 30, 2008. SAG postponed planned negotiating sessions earlier this week because of the fight with its union president. 

And it's unlikely studios would agree to return to the bargaining table as long as there is a pending lawsuit challenging the legitimacy of negotiations.

Eric George, attorney for Rosenberg and the other directors, said he would file an appeal in the next few days with the California Court of Appeal.

Ned Vaughn, spokesman for the Unite for Strength group that represents so-called moderate board members, hailed the judge's ruling and called on Rosenberg to drop his complaint.

"It's outrageous that this lawsuit has further delayed negotiations,'' he said. "It's time for Alan Rosenberg to drop this and accept that SAG members voted for change. They want it now."

Rosenberg, who attended Thursday's hearing, declined to comment.

Thursday's ruling marked a second setback for Rosenberg, whose initial appeal for an injunction was denied after the judge cited several technical errors in the complaint.

“I’m pleased that we can put this matter behind us and dedicate our complete focus to the needs of Screen Actors Guild members. There’s a lot of work ahead of us,” said SAG interim National Executive Director David White.

-- Richard Verrier

Is French media giant Vivendi souring on its investment in NBC Universal -- perhaps un petit peu?

Mais non, says Vivendi Chief Executive Jean-Bernard Levy.

Nonetheless, Vivendi plans to write down the value of its 20% stake in NBC Universal next month when the French company reports its quarterly earnings. For now, Vivendi won't discuss the amount of the anticipated noncash charge, which is necessary to reflect the lower valuation of the U.S. company that boasts the NBC broadcast network, cable channels USA Network, Bravo and MSNBC, and Universal Studios. 

General Electric Co., whose stock has been pummeled in the market meltdown, owns the controlling 80% of NBC Universal. When GE and Vivendi combined their entertainment properties in 2004 to create NBC Universal, the enterprise was valued at more than $40 billion, making Vivendi's portion worth around $8 billion. (GE reiterated Tuesday that it had no plans to reduce the value of NBC that it carries on its battered books.) 

"It's a tough environment, but we are very pleased with NBC," Levy said during an interview in Santa Monica. "We are pleased with the profits that NBC has achieved; the overall performance of NBC U has been very good." 

Vivendi had an opportunity in December to divest its stake in NBC Universal  -- but it chose not to. The timing was not right because of the U.S. media company's depressed trading multiples, Levy said. Vivendi intends to hang on to its interest until the market bounces back.

How long will Vivendi be part of the peacock company? Levy would not tip his hand other than to say, "We are not long-term owners." He added that his company prefers to be in the "driver's seat" of its investments, and that is not the case with NBC.

Still, Levy is a big fan of the guy behind the wheel, NBC Universal CEO Jeff Zucker.

"I like him very much, he is an excellent manager and he certainly knows his business," Levy said of Zucker. The two CEOs spent time together last weekend in Tampa, where they attended the Super Bowl, which was televised by NBC and generated huge ratings.

Levy now is expecting Zucker to make similar gains in the financial field. "We are happy that we will share in the potential value creation that he and his team will implement," Levy said.

-- Meg James

Photo of Vivendi CEO Jean-Bernard Levy by Alex Pham/Los Angeles Times

A judge on Tuesday denied a temporary restraining order sought by SAG President Alan Rosenberg to block negotiations between the union and the major studios.

Rosenberg and three other board members are seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee, contending that the action violated the state's corporate code.

But Los Angeles Superior Court Judge James Chalfant denied the request for an injunction, citing several technical errors in the lawsuit, and ordered that the complaint be resubmitted. A hearing on the case will be held Thursday. The litigation has delayed contract negotiations that were set to resume this week.

"They are so desperate to hold on to their power that they are willing to burn down their own house,'' said New York SAG President Sam Freed, one of the board members being sued. Rosenberg declined to comment.

-- Richard Verrier

Financial news network Bloomberg Television today pulled the plug on its "Night Talk" program and bid goodbye to longtime anchor Mike Schneider.

Schneider's last program was Monday night.

Additional staff cuts and TV programming lineup changes are expected to be announced Wednesday. The moves are part of broad restructuring of the multimedia group, which includes Bloomberg Television and Bloomberg Radio, a person familiar with the situation said.

The private company, founded by New York Mayor Michael Bloomberg, generates about $6 billion a year in revenue.

But the shuffle has already begun. Bloomberg Television Managing Editor John Meehan left the company last week. His departure comes four months after former NBC, CBS and Sony BMG Music executive Andy Lack was hired to manage Bloomberg's television and radio operations. Lack brought in David Rhodes from the Fox News Channel to run the television operations.

Bloomberg operates 24 hours a day and has TV channels in 11 countries, but its sprawling operations are seen as disjointed and not making full use of its team of reporters in 143 bureaus around the world.

Although the company plans to eliminate programs and trim employees, it plans to hire additional staff this year to improve its programming to better position the company for growth, said the person familiar with the situation.

"While other news organizations are shrinking, we continue to expand, improving our existing products while investing in new ones," Bloomberg Chairman Peter Grauer said in a statement in October when Lack was hired.

-- Meg James

Summit Entertainment and Lionsgate aren't getting hitched. At least not yet, if ever.

The idea has been broached, according to insiders, but nothing is cooking. Such a corporate marriage, were it to happen, would unite a suddenly hot movie production company with Hollywood's leading independent movie and TV studio, which is behind the "Saw" and "Tyler Perry" franchises.

So far, however, Summit has played hard to get.

A few weeks before the late November release of Summit's box office smash "Twilight," the company headed by Patrick Wachsberger and Rob Friedman, was approached by Lionsgate about a potential merger. Lionsgate, well aware of the teen vampire film's hot pre-release buzz, made an offer for Summit but was rebuffed because the price was too low.

Lionsgate and Summit, which are located right around the corner from each other in Santa Monica, say privately that there have been no formal talks since last fall. That's not to say that Lionsgate Chief Executive Jon Feltheimer and Summit's Friedman, who are golfing buddies, would never discuss it between rounds. Who knows?

After all, "Twilight," which was made for $37 million and grossed $341 million worldwide, is a highly prized new movie franchise, one that would fit nicely with Lionsgate's strategy of producing moderately budgeted movies targeted at a specific audience. The sequel, "New Moon," based on the second novel of author Stephenie Meyer's popular four-book series, is due in theaters Nov. 25 of this year. The first film's director, Catherine Hardwicke, dropped out for the next installment and was replaced by Chris Weitz, whose previous credits include "The Golden Compass" and "About a Boy."

"Twilight" put the nearly 2-year-old Summit on the Hollywood map. The start-up's first five releases included such box office flops as "Penelope," "Fly Me to the Moon" and "Sex Drive." Next up for the production and international sales company is "Push," a supernatural thriller with Dakota Fanning that opens Friday, and "Knowing," a mystery thriller starring Nicolas Cage, on March 20.

--Claudia Eller

Photos: Rob Friedman, left (Kevin Winter/Getty Images) and Jon Feltheimer (Vince Bucci/Getty Images)

To virtually no one's surprise, the Screen Actors Guild and the major studios announced late Wednesday that they will return to the negotiating table Tuesday to try to forge a new contract for actors.

The move comes only two days after SAG's board hired a new negotiator, John McGuire, and a new interim executive director, David White, following the ouster of Doug Allen. At the same time, the board formed a new "task force" to replace the previous negotating committee.

Moderates who orchestrated the shake-up are expected to move quickly to finalize a new contract, which will be modeled on deals secured over the past year by three other talent unions. Their challenge will be to obtain improvements over the studios' previous "final offer" that will be acceptable to members and demonstrate that the leadership didn't capitulate under pressure.

SAG members have been working without a contract since June 30.

-- Richard Verrier

Twentieth Century Fox has agreed to co-finance the third movie in the “Chronicles of Narnia” series, pending approval of the final script and shooting budget. If all goes as planned, Fox and Walden Media, which controls the movie rights to C.S. Lewis’ classic children's books, hope to begin production on "The Voyage of the Dawn Treader" by late summer so it will be ready for holiday 2010 release.

First, however, Fox and Walden have to hire a screenwriter to do another pass on the script that was last rewritten by Richard LaGravenese, whose credits include "Freedom Writers" and "The Horse Whisperer." The movie companies are looking to make the film for about $140 million. Michael Apted, who made "Amazing Grace" and the 1999 Bond flick "The World Is Not Enough," is on board to direct.

Fox is taking a financial gamble that Disney was unwilling to wage despite helping bankroll the first two films in the "Narnia" family franchise. Walden, owned by entrepreneur Phil Anschutz, was forced to seek a new financial partner on “Dawn Treader” after Disney balked at the cost and opted out.

Fox was the most likely partner because the studio already markets and distributes Walden movies under its Fox Walden label.

Over the last few weeks, Walden chief David Weil and “Narnia” producer Mark Johnson have held a series of meetings with top Fox executives, including movie chiefs Tom Rothman and Jim Gianopulos, to discuss script revisions and the movie's cost.

While the targeted budget of “Dawn Treader” is much lower than that of the last Narnia movie, “Prince Caspian,” which cost $225 million to produce, it's still a big gamble. Released by Disney last year, the sequel was much less popular than the first "Narnia" movie, “The Lion, the Witch and the Wardrobe.” The sequel grossed $419 million worldwide compared with its 2005 predecessor, which generated $745 million in ticket sales.

Disney and Walden hope that DVD sales of "Prince Caspian" will help pull the movie out of the red.

-- Claudia Eller

Photo: "The Chronicles of Narnia: Prince Caspian" is courtesy of Walt Disney Studios

Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.

The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies. 

A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.

A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Film and TV crew members rally amid SAG talks

As the Screen Actors Guild and the major studios resumed contract negotiations today, Hollywood's below-the-line laborers wanted to deliver a message: "Let's get back to work."

About 100 film and TV workers, including cinematographers, studio drivers, makeup artists and prop makers, staged a rally this morning outside the Sherman Oaks headquarters of the Alliance of Motion Picture and Television Producers -- the negotiating arm of the studios -- urging the parties to "reach a speedy resolution to the current stalemate."

Rally organizers said their purpose was not to take a position on the contract dispute, but to convey a sense of urgency about how the continuing stalemate was creating hardships for entertainment industry workers.

"We decided we needed to be seen physically,'' said Ed Gutentag, a cinematographer and spokesman for the self-described "Let's Get Back to Work" coalition. "We're not taking sides, we just want to send a message that we're suffering by their inability to come up with a deal."

Actors have been working without a contract since June 30, creating an atmosphere of uncertainty that has contributed to a steep falloff in feature film production. The slowdown has been a double whammy for crew members, who were hit hard by the fallout from the 100-day writers strike last year.

Hope Parrish, a property master, says she hasn't worked in eight months, the longest stretch in her 29 years in the business. "Nobody is starting any projects,'' said Parrish, who worked on "The Curious Case of Benjamin Button." "I would like to see the producers negotiate a good deal with the actors so we can get back to work."

Many of the protestors belong to the International Alliance of Theatrical Stage Employees, which is grappling with its own contract issues with the studios. IATSE members are about to vote on a controversial contract that includes widely unpopular cuts in health benefits, including extending the number of hours members have to work to keep their health insurance benefits.

Also joining the rally were about 50 supporters from the Membership First faction at SAG, who've been at war with the union's board members over the firing of former executive director Doug Allen. Membership First fears the new negotiating team will capitulate to the studios, short-changing what actors earn from shows distributed on the Internet. In that spirit, they carried signs declaring, "SAG Board Sells Us Out Again" and "Vote No on Contract."

--Richard Verrier

So, here's a new twist on movie promotions.

20th Century Fox has produced a three-part trailer to promote its big-budget summer release "X-Men Orgins: Wolverine" that will run as separate 60-second spots beginning Sunday on the studio's TV shows "Family Guy," "House" and "American Idol."

Immediately after Tuesday's broadcast of the final "Wolverine" spot on "Idol," all three trailers — which together form a narrative — will appear on Yahoo.

The fourth "X-Men" movie, which debuts in theaters May 1, is one of this summer's most highly anticipated releases. The spinoff of the three earlier films, which have generated a total of $1.2 billion in worldwide ticket sales, traces the origins and transformation of the the mutant played by the humanly handsome Hugh Jackman into Wolverine. The studio is billing it as the first chapter in the X-Man saga that unites Wolverine with other legends in the X-Men character "universe."

Fox says the fourth installment of the Marvel Comics movie cost about $100 million. That would be considerably less than the cost of the 2006 sequel "X-Men: The Last Stand," which reportedly carried a price tag of more than $200 million. Why cheaper? For one, Jackman is the only major star in this "prequel." And Halle Berry, who appeared in the first three films, doesn't have a role. Nor was "Wolverine" directed by Brett Ratner, who made the last film, but rather Gavin Hood, who won the 2006 best foreign film Oscar for the low-budget crime drama "Tsotsi" and has never handled a big franchise picture.

— Claudia Eller

Photos from "Wolverine" courtesy of Fox

News Corp. Chief Executive Rupert Murdoch (above right) is in Los Angeles this week and next week to meet with top Fox executives on the West Coast.

Murdoch's presence, and his scrutiny of the company's entertainment businesses, has prompted increased speculation that Peter Chernin (above left), president and chief operating officer of News Corp., actually might be leaving the company after 20 years.  Chernin's contract expires in June.  Chernin has been particularly tight-lipped about his plans, fueling anxiety among Fox executives who want to keep Chernin, who is admired by both Wall Street and Hollywood power players.

Chernin declined to comment.

Murdoch flew into Los Angeles from Australia this week after celebrating the 100th birthday of his mother, Dame Elisabeth Murdoch, along with about 600 friends. The 77-year-old Murdoch is fond of saying that his mum's longevity bodes well for his own prospects of remaining at the helm of News Corp. for many more years.

Succession issues have bedeviled the company because Murdoch wants one of his children (he has six) to eventually run the global media empire that includes the 20th Century Fox film studio, Fox Broadcasting network, cable television outlets that include Fox News Channel, social network MySpace and a string of newspapers that includes his recently acquired jewel, The Wall Street Journal. 

Some on Wall Street worry that Murdoch's kids are not ready to manage the sprawling businesses that generated $33 billion in revenue last fiscal year. What's more, it would be a particularly awkward time for a major executive transition because the recession has hammered media companies that depend on advertising and consumer spending for such non-essential purchases as DVDs.

Last week, News Corp. reported a $6.4-billion loss for the quarter ended Dec. 31. Its stock is down 65% from a 52-week high of $20.49. 

During a conference call with analysts to discuss the results, Chernin seemed to play a less prominent role than he has in the past. Murdoch dominated the session, fielding questions about the entertainment properties that have long been Chernin's specialty.

Then there was the sticky issue of Chernin's contract.

Back during November's earnings call, when Murdoch and Chernin were asked to characterize the negotiations, Chernin called them "constructive." Murdoch quickly jumped in:  "I would characterize them as constructive and friendly."

But last week, the same question prompted a more measured response. "Peter and I are continuing our conversations and they're private and that is all there is to it," Murdoch said.  "Nothing more for me to say and we won't take any further questions on that. It is a confidential matter."

Chernin remained silent.

Murdoch's tour through Los Angeles is part of a strategic review of the company's businesses that takes place every three years, say people familiar with the situation who did not want to be identified in discussing the sensitive subject. Murdoch will hold two more weeks of meetings with top Fox executives this month in New York.

If Chernin were to leave News Corp., he would be available to step into the top job at any number of troubled media companies, of which there appears to be no shortage.

People close to Chernin said it would be hasty to draw a conclusion about Chernin's tenure and Murdoch's visit (the CEO comes here more often than people think, they said). Chernin, 57, has been known to take his employment negotiations down to the wire.  His last contract renewal, in July 2004, was announced three days before the new agreement went into effect.

— Dawn C. Chmielewski and Meg James   

Photo: Daniel Acker/Bloomberg News

Billionaire Sumner Redstone, who has been under pressure to restructure his family company's $1.6 billion in debt, said this morning that "substantial progress" had been made in talks with banks.

"An agreement is now within reach," the 85-year-old Redstone said during a conference call to discuss Viacom Inc.'s  quarterly earnings.

In October, Redstone got caught in the stock-market avalanche, which created a credit crisis for the mogul, who owns controlling stakes in Viacom -- which owns MTV, Nickelodeon, Comedy Central and Paramount Pictures movie studio -- and television and radio broadcasting behemoth CBS Corp.

His family company, National Amusements Inc., was forced to sell non-voting shares in Viacom and CBS at record-low prices to come up with cash to satisfy bankers after National Amusements defaulted on bank loans.   Since late last fall, National Amusements -- led by Redstone's daughter, Shari Redstone -- has been working closely with banks to restructure the company's debt. 

A December deadline for National Amusements to repay $800 million in bank loans was extended into this year, a signal that the elder Redstone might be able to pull off his high-wire credit act and save his media empire. In December, National Amusements jettisoned its ailing video-game company and said that it would sell some of its movie theaters to pay down debt.

Redstone did not say when he expected an agreement would be reached, and he declined to answer questions.  However, two people close to National Amusements said this week that a deal could come within the the next few weeks.

-- Meg James

DreamWorks Animation Chief Executive Jeffrey Katzenberg made a mea culpa on Wednesday, saying that the Motion Picture & Television Fund had done a poor job of communicating the reasons for its decision to close the hospital and nursing home.

"We give ourselves a failing grade,"  said Katzenberg, who chairs the charity's fundraising board. "This has not been communicated well."

But Katzenberg and other board members stood by their decision, describing it as a necessary move to preserve the viability of the organization and its various other programs, which includes six healthcare centers, child care services and a retirement community in Woodland Hills with 215 residents.

"We have made a decision that allows this incredibly important enterprise to live on and have a great future," he said during a conference call with reporters, aimed at quelling fury among the residents' family members who are angry over the facility's closure.

David Tillman, the fund's CEO, said there was a $20-million gap between program revenues and the cost of services that was projected to widen because of rising medical costs and declining reimbursements from the government. In the past, he said, the fund could rely on investment income and philanthropy to make up the shortfall, but that option is no longer possible because of the deep recession.

Frank Mancuso, chairman of the fund's corporate board, said that the board had already taken various steps to stem losses, including closing the hospital's costly intensive care unit, but had run out of options. "We left no stone unturned," he said.

-- Richard Verrier

While several of Hollywood's financially strained independent production companies have either gone under or drastically scaled back operations over the past year, Fred Smith -- the founder and chief executive of FedEx Corp. -- says he's still committed to his side business: investing in movies.

For more than a decade, the Hollywood outsider who lives in Memphis, Tenn., has quietly bankrolled Alcon Entertainment, the boutique production outfit behind such films as "My Dog Skip" and "The Sisterhood of the Traveling Pants" series. His company may not be known for any blockbuster success and has had some box-office losers like the romantic comedy "Chasing Liberty" and its debut movie, "Lost & Found." But Smith claims that, thanks to solid performers such as the romantic drama "P.S. I Love You," starring Hilary Swank and Gerald Butler, and continued financial discipline, Alcon has been a profitable venture.

He attributes the company's stamina in what he readily acknowledges is "a very tough business" to the cost-conscious "no-limos" philosophy guiding Alcon's two chief executives, Andrew Kosove and Broderick Johnson. Despite being a Yalie, Smith hired the two Princeton alums after meeting them in 1994 and being impressed with their 220-page business plan for launching a movie company.

Smith said the duo's success lies in the fact that the pair has stuck to their original strategy for lowering risks inherent to the unpredictable movie business: Keep film budgets tight and overhead low; focus on specific genres like family films; and have a strong studio partner to help market and distribute the pictures (Alcon has a multi-year distribution deal with Warner Bros. and typically sells off the international rights in its films to help finance them).

"Those three things have proven that we're the exception to the rule," Smith said when he dropped by The Times to talk about the toll that the bad economy is taking on his main business --delivering packages.

Smith ducked a question about how much of his own money he's invested in the movie business. "It's mostly been done with borrowed money," he says, noting Alcon's good fortune last year in securing a $500-million bank loan before those kind of "slate-financing" deals dried up. Smith says he used his own FedEx stock to secure the loan.

The entrepreneur, who leaves the day-to-day running of Alcon to his two movie chiefs, says he reads the occasional script and rarely visits the set of his company's movies.

His personal Alcon favorite? Smith says its Jay Russell's family movie, "My Dog Skip," based on Willie Morris' World War II memoir about a boy and his dog growing up in a small Southern town. Made for $7 million, the 2000 release grossed $35 million at the worldwide box office and did well on video. Smith said he defies anyone to watch the movie "without a tear in their eye."

Smith insists he doesn't regret his own failings as a would-be movie star. He jokes that any ambitions he may have harbored were "left on the cutting-room floor" when his three-minute cameo in Fox's 2000 "Cast Away," starring Tom Hanks as a FedEx executive in a modern-day version of Robinson Crusoe, was "so bad, so atrocious, it was cut to 18 seconds."

--Claudia Eller

Steven Spielberg's DreamWorks finalized a distribution deal with Disney today, giving the filmmaker key financial demands he failed to extract from his longtime studio alley Universal Pictures: a commitment to risk hundreds of millions in film prints and advertising costs and to share its valuable pay TV slots.

As part of the deal, Disney will also give DreamWorks -- which has been struggling to raise money for its new studio -- a cash advance of about $100 million and a potential $75-million credit line which Spielberg & Co. can draw on for future productions. Disney's total outlay of $175 million is taking the form of a loan and is not an equity investment.

But, here's the catch. While DreamWorks desperately needs the cash advance to get its slate of movies rolling, it can't access Disney's money until it raises the first phase of its debt financing -- $325 million -- which will trigger a matching equity investment by Spielberg's new studio partner India's Reliance Entertainment.

"Disney has given us all the support we need to be in a position to raise our money and launch our company," said Stacey Snider, partner and chief executive of DreamWorks.

DreamWorks initially hoped to close its bank financing by the the end of the first quarter, but that now appears to be unlikely. A person close to the matter said that a more realistic time frame is late April.

Spielberg and Reliance will continue to fund overhead at DreamWorks, which employs about 60 people, until the deal is completed.

Disney's distribution agreement calls for DreamWorks to deliver up to 30 movies over the term of the deal. DreamWorks hopes to make up to six films a year for Disney's Touchstone Films banner. The first release -- yet to be identified -- will be in 2010.

Disney will market and release the movies worldwide everywhere except India, where Mumbai-based Reliance retains the distribution rights.

The Burbank studio will advance all the prints and advertising costs in exchange for collecting a distribution fee of what could amount to as much as 10%.

DreamWorks will also be able to piggyback on Disney's pay cable deal with Starz Entertainment, which provides movie producers with a significant revenue stream worth hundreds of millions of dollars. Last year, DreamWorks had failed at an attempt to secure its own pay-TV deal with HBO.

Spielberg hooked up with Reliance last year in a 50-50 venture to relaunch DreamWorks as a new studio with hoped-for funding of $1.25 billion. Reliance agreed to match in equity what DreamWorks raises in debt, but those efforts have been greatly hampered by the global credit crisis.

Surprising news of a pending deal between DreamWorks and Disney came late last week after a previously announced agreement between the Spielberg studio and Universal Pictures fell apart. Last fall, Universal had beat Disney and other potential distributors to the punch by cinching the right to distribute DreamWorks new movies. But, as DreamWorks' attempts to raise all of its funding by early this year became derailed by the financial markets, Spielberg and Reliance put pressure on Universal to change the original terms of its distribution deal.

Among sticking points between Universal and DreamWorks was that Universal refused to put up hundreds of millions in funds for prints and ads of DreamWorks movies -- an extremely risky investment in the volatile film business. DreamWorks also wanted more movie slots from Universal's deal with HBO than the studio was able to provide.

-- Claudia Eller

Left photo: Steven Spielberg. Credit: Hector Mata / AFP

Right photo: Stacey Snider. Credit: Vince Bucci / Getty Images

Think of it as a repeat of the swearing-in of President Obama in "an excess of prudence."

The Screen Actors Guild board voted for a second time to oust former executive director Doug Allen and replace the union's negotiating committee with a newly appointed task force dominated by moderates.

The move was widely anticipated, given that the board had previously taken such a vote last month by means of a "written assent."

That action, however, was challenged in a lawsuit filed last week by SAG President Alan Rosenberg and three other directors. Rosenberg has been a staunch ally of Allen and had refused to accept the board's appointment of David White as interim executive director and John McGuire as SAG's new chief negotiator. Last week, a judge denied a request for a temporary restraining order, saying the board had acted within its rights.

Sunday's vote -- supported by 59% of the 71-member board -- delivers a further blow to Rosenberg's legal challenge, which had threatened to delay a resumption in long-stalled contract negotiations with the studios. Talks are expected to resume on Feb. 17.

-- Richard Verrier

DreamWorks' planned distribution deal with Universal Pictures has collapsed as the parties are unable to agree upon final terms.

The failure of the agreement paves the way for Walt Disney Studios, which had earlier sought a distribution deal with DreamWorks, to step in as Steven Spielberg's new studio home, according to people familiar with the situation.

DreamWorks has been struggling for months to raise funds for its new studio, but efforts to raise the debt portion of its desired $1.25 billion in financing has been hampered by the global credit crisis.

DreamWorks, which split from former owner Paramount Pictures last year, is in need of some serious cash to continue financing overhead and jump-start plans to make about six movies a year. Spielberg's businesss partner, India's Reliance Entertainment, will not put up the equity portion of the financing until DreamWorks secures a matching sum in debt. DreamWorks' lead bank, JPMorgan Chase, so far has received a commitment for less than half of the $325-million loan that Spielberg hopes to have by late March. At that point, Reliance would match the bank contribution. DreamWorks is seeking to raise a total of about $1.25 billion in equity and debt.

Reliance had been pressuring Universal to advance DreamWorks at least $150 million in interim financing. But Universal, which in October announced a multi-year distribution deal with DreamWorks, balked and this morning announced it had halted talks with DreamWorks. "Over the past several weeks DreamWorks has demanded material changes to previously agreed-upon terms. It is clear DreamWorks' needs and Universal's business interests are no longer in alignment," Universal said.

Disney, which had been one of several DreamWorks distribution suitors, is in talks with the Spielberg camp and apparently willing to step in and make the investment needed by the filmmaker. Disney has always been Plan B, although Spielberg's first choice was Universal, where he began his career. Spielberg's creative partner Stacey Snider, who runs DreamWorks, used to be chairwoman of Universal Pictures.

This is the second time that Universal let DreamWorks slip away over money issues. Before being sold to Paramount in 2006 for $1.6 billion, DreamWorks had been in serious negotiations with Universal. But at the eleventh hour, Universal lowered its acquisition offer and the deal fell apart.

-- Claudia Eller

UPDATED at 4:59 p.m.:  With a judge having denied a temporary restraining order sought by Screen Actors Guild President Alan Rosenberg, the major studios are expected  to resume contract negotiations with the union. Talks have been tentatively scheduled for Feb. 17 and 18, sources familiar with the talks say.

A judge rebuffed for the second time a bid by Screen Actors Guild President Alan Rosenberg to block the union's new negotiating team from reviving contract talks with the major studios.

Rosenberg and three other board members filed a lawsuit this week seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee. They maintained the vote, taken by means of a "written assent," violated the state's business laws and the union's own bylaws.

But Los Angeles Superior Court Judge James Chalfant denied the request for a temporary restraining order, ruling that the board's action complied with the state law governing corporations. He also rejected arguments by Rosenberg's attorneys that a two-third vote was required to disband the committee.

The judge's decision removes what would have been an embarrassing setback for SAG. A restraining order could have unseated the union's newly appointed interim executive director and chief negotiator. They were tapped by the board after it fired former Executive Director Doug Allen, contending he mishandled negotiations.

Nonetheless, Thursday's ruling, which didn't dismiss the overall case, doesn't end the uncertainty over when contract negotiations with the studios will resume. Actors have been without a contract since June 30, 2008. SAG postponed planned negotiating sessions earlier this week because of the fight with its union president. 

And it's unlikely studios would agree to return to the bargaining table as long as there is a pending lawsuit challenging the legitimacy of negotiations.

Eric George, attorney for Rosenberg and the other directors, said he would file an appeal in the next few days with the California Court of Appeal.

Ned Vaughn, spokesman for the Unite for Strength group that represents so-called moderate board members, hailed the judge's ruling and called on Rosenberg to drop his complaint.

"It's outrageous that this lawsuit has further delayed negotiations,'' he said. "It's time for Alan Rosenberg to drop this and accept that SAG members voted for change. They want it now."

Rosenberg, who attended Thursday's hearing, declined to comment.

Thursday's ruling marked a second setback for Rosenberg, whose initial appeal for an injunction was denied after the judge cited several technical errors in the complaint.

“I’m pleased that we can put this matter behind us and dedicate our complete focus to the needs of Screen Actors Guild members. There’s a lot of work ahead of us,” said SAG interim National Executive Director David White.

-- Richard Verrier

Is French media giant Vivendi souring on its investment in NBC Universal -- perhaps un petit peu?

Mais non, says Vivendi Chief Executive Jean-Bernard Levy.

Nonetheless, Vivendi plans to write down the value of its 20% stake in NBC Universal next month when the French company reports its quarterly earnings. For now, Vivendi won't discuss the amount of the anticipated noncash charge, which is necessary to reflect the lower valuation of the U.S. company that boasts the NBC broadcast network, cable channels USA Network, Bravo and MSNBC, and Universal Studios. 

General Electric Co., whose stock has been pummeled in the market meltdown, owns the controlling 80% of NBC Universal. When GE and Vivendi combined their entertainment properties in 2004 to create NBC Universal, the enterprise was valued at more than $40 billion, making Vivendi's portion worth around $8 billion. (GE reiterated Tuesday that it had no plans to reduce the value of NBC that it carries on its battered books.) 

"It's a tough environment, but we are very pleased with NBC," Levy said during an interview in Santa Monica. "We are pleased with the profits that NBC has achieved; the overall performance of NBC U has been very good." 

Vivendi had an opportunity in December to divest its stake in NBC Universal  -- but it chose not to. The timing was not right because of the U.S. media company's depressed trading multiples, Levy said. Vivendi intends to hang on to its interest until the market bounces back.

How long will Vivendi be part of the peacock company? Levy would not tip his hand other than to say, "We are not long-term owners." He added that his company prefers to be in the "driver's seat" of its investments, and that is not the case with NBC.

Still, Levy is a big fan of the guy behind the wheel, NBC Universal CEO Jeff Zucker.

"I like him very much, he is an excellent manager and he certainly knows his business," Levy said of Zucker. The two CEOs spent time together last weekend in Tampa, where they attended the Super Bowl, which was televised by NBC and generated huge ratings.

Levy now is expecting Zucker to make similar gains in the financial field. "We are happy that we will share in the potential value creation that he and his team will implement," Levy said.

-- Meg James

Photo of Vivendi CEO Jean-Bernard Levy by Alex Pham/Los Angeles Times

A judge on Tuesday denied a temporary restraining order sought by SAG President Alan Rosenberg to block negotiations between the union and the major studios.

Rosenberg and three other board members are seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee, contending that the action violated the state's corporate code.

But Los Angeles Superior Court Judge James Chalfant denied the request for an injunction, citing several technical errors in the lawsuit, and ordered that the complaint be resubmitted. A hearing on the case will be held Thursday. The litigation has delayed contract negotiations that were set to resume this week.

"They are so desperate to hold on to their power that they are willing to burn down their own house,'' said New York SAG President Sam Freed, one of the board members being sued. Rosenberg declined to comment.

-- Richard Verrier

Financial news network Bloomberg Television today pulled the plug on its "Night Talk" program and bid goodbye to longtime anchor Mike Schneider.

Schneider's last program was Monday night.

Additional staff cuts and TV programming lineup changes are expected to be announced Wednesday. The moves are part of broad restructuring of the multimedia group, which includes Bloomberg Television and Bloomberg Radio, a person familiar with the situation said.

The private company, founded by New York Mayor Michael Bloomberg, generates about $6 billion a year in revenue.

But the shuffle has already begun. Bloomberg Television Managing Editor John Meehan left the company last week. His departure comes four months after former NBC, CBS and Sony BMG Music executive Andy Lack was hired to manage Bloomberg's television and radio operations. Lack brought in David Rhodes from the Fox News Channel to run the television operations.

Bloomberg operates 24 hours a day and has TV channels in 11 countries, but its sprawling operations are seen as disjointed and not making full use of its team of reporters in 143 bureaus around the world.

Although the company plans to eliminate programs and trim employees, it plans to hire additional staff this year to improve its programming to better position the company for growth, said the person familiar with the situation.

"While other news organizations are shrinking, we continue to expand, improving our existing products while investing in new ones," Bloomberg Chairman Peter Grauer said in a statement in October when Lack was hired.

-- Meg James

Summit Entertainment and Lionsgate aren't getting hitched. At least not yet, if ever.

The idea has been broached, according to insiders, but nothing is cooking. Such a corporate marriage, were it to happen, would unite a suddenly hot movie production company with Hollywood's leading independent movie and TV studio, which is behind the "Saw" and "Tyler Perry" franchises.

So far, however, Summit has played hard to get.

A few weeks before the late November release of Summit's box office smash "Twilight," the company headed by Patrick Wachsberger and Rob Friedman, was approached by Lionsgate about a potential merger. Lionsgate, well aware of the teen vampire film's hot pre-release buzz, made an offer for Summit but was rebuffed because the price was too low.

Lionsgate and Summit, which are located right around the corner from each other in Santa Monica, say privately that there have been no formal talks since last fall. That's not to say that Lionsgate Chief Executive Jon Feltheimer and Summit's Friedman, who are golfing buddies, would never discuss it between rounds. Who knows?

After all, "Twilight," which was made for $37 million and grossed $341 million worldwide, is a highly prized new movie franchise, one that would fit nicely with Lionsgate's strategy of producing moderately budgeted movies targeted at a specific audience. The sequel, "New Moon," based on the second novel of author Stephenie Meyer's popular four-book series, is due in theaters Nov. 25 of this year. The first film's director, Catherine Hardwicke, dropped out for the next installment and was replaced by Chris Weitz, whose previous credits include "The Golden Compass" and "About a Boy."

"Twilight" put the nearly 2-year-old Summit on the Hollywood map. The start-up's first five releases included such box office flops as "Penelope," "Fly Me to the Moon" and "Sex Drive." Next up for the production and international sales company is "Push," a supernatural thriller with Dakota Fanning that opens Friday, and "Knowing," a mystery thriller starring Nicolas Cage, on March 20.

--Claudia Eller

Photos: Rob Friedman, left (Kevin Winter/Getty Images) and Jon Feltheimer (Vince Bucci/Getty Images)

To virtually no one's surprise, the Screen Actors Guild and the major studios announced late Wednesday that they will return to the negotiating table Tuesday to try to forge a new contract for actors.

The move comes only two days after SAG's board hired a new negotiator, John McGuire, and a new interim executive director, David White, following the ouster of Doug Allen. At the same time, the board formed a new "task force" to replace the previous negotating committee.

Moderates who orchestrated the shake-up are expected to move quickly to finalize a new contract, which will be modeled on deals secured over the past year by three other talent unions. Their challenge will be to obtain improvements over the studios' previous "final offer" that will be acceptable to members and demonstrate that the leadership didn't capitulate under pressure.

SAG members have been working without a contract since June 30.

-- Richard Verrier

Twentieth Century Fox has agreed to co-finance the third movie in the “Chronicles of Narnia” series, pending approval of the final script and shooting budget. If all goes as planned, Fox and Walden Media, which controls the movie rights to C.S. Lewis’ classic children's books, hope to begin production on "The Voyage of the Dawn Treader" by late summer so it will be ready for holiday 2010 release.

First, however, Fox and Walden have to hire a screenwriter to do another pass on the script that was last rewritten by Richard LaGravenese, whose credits include "Freedom Writers" and "The Horse Whisperer." The movie companies are looking to make the film for about $140 million. Michael Apted, who made "Amazing Grace" and the 1999 Bond flick "The World Is Not Enough," is on board to direct.

Fox is taking a financial gamble that Disney was unwilling to wage despite helping bankroll the first two films in the "Narnia" family franchise. Walden, owned by entrepreneur Phil Anschutz, was forced to seek a new financial partner on “Dawn Treader” after Disney balked at the cost and opted out.

Fox was the most likely partner because the studio already markets and distributes Walden movies under its Fox Walden label.

Over the last few weeks, Walden chief David Weil and “Narnia” producer Mark Johnson have held a series of meetings with top Fox executives, including movie chiefs Tom Rothman and Jim Gianopulos, to discuss script revisions and the movie's cost.

While the targeted budget of “Dawn Treader” is much lower than that of the last Narnia movie, “Prince Caspian,” which cost $225 million to produce, it's still a big gamble. Released by Disney last year, the sequel was much less popular than the first "Narnia" movie, “The Lion, the Witch and the Wardrobe.” The sequel grossed $419 million worldwide compared with its 2005 predecessor, which generated $745 million in ticket sales.

Disney and Walden hope that DVD sales of "Prince Caspian" will help pull the movie out of the red.

-- Claudia Eller

Photo: "The Chronicles of Narnia: Prince Caspian" is courtesy of Walt Disney Studios

Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.

The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies. 

A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.

A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

'Wolverine' promo is 'too big for one night,' says Fox

So, here's a new twist on movie promotions.

20th Century Fox has produced a three-part trailer to promote its big-budget summer release "X-Men Orgins: Wolverine" that will run as separate 60-second spots beginning Sunday on the studio's TV shows "Family Guy," "House" and "American Idol."

Immediately after Tuesday's broadcast of the final "Wolverine" spot on "Idol," all three trailers — which together form a narrative — will appear on Yahoo.

The fourth "X-Men" movie, which debuts in theaters May 1, is one of this summer's most highly anticipated releases. The spinoff of the three earlier films, which have generated a total of $1.2 billion in worldwide ticket sales, traces the origins and transformation of the the mutant played by the humanly handsome Hugh Jackman into Wolverine. The studio is billing it as the first chapter in the X-Man saga that unites Wolverine with other legends in the X-Men character "universe."

Fox says the fourth installment of the Marvel Comics movie cost about $100 million. That would be considerably less than the cost of the 2006 sequel "X-Men: The Last Stand," which reportedly carried a price tag of more than $200 million. Why cheaper? For one, Jackman is the only major star in this "prequel." And Halle Berry, who appeared in the first three films, doesn't have a role. Nor was "Wolverine" directed by Brett Ratner, who made the last film, but rather Gavin Hood, who won the 2006 best foreign film Oscar for the low-budget crime drama "Tsotsi" and has never handled a big franchise picture.

— Claudia Eller

Photos from "Wolverine" courtesy of Fox

News Corp. Chief Executive Rupert Murdoch (above right) is in Los Angeles this week and next week to meet with top Fox executives on the West Coast.

Murdoch's presence, and his scrutiny of the company's entertainment businesses, has prompted increased speculation that Peter Chernin (above left), president and chief operating officer of News Corp., actually might be leaving the company after 20 years.  Chernin's contract expires in June.  Chernin has been particularly tight-lipped about his plans, fueling anxiety among Fox executives who want to keep Chernin, who is admired by both Wall Street and Hollywood power players.

Chernin declined to comment.

Murdoch flew into Los Angeles from Australia this week after celebrating the 100th birthday of his mother, Dame Elisabeth Murdoch, along with about 600 friends. The 77-year-old Murdoch is fond of saying that his mum's longevity bodes well for his own prospects of remaining at the helm of News Corp. for many more years.

Succession issues have bedeviled the company because Murdoch wants one of his children (he has six) to eventually run the global media empire that includes the 20th Century Fox film studio, Fox Broadcasting network, cable television outlets that include Fox News Channel, social network MySpace and a string of newspapers that includes his recently acquired jewel, The Wall Street Journal. 

Some on Wall Street worry that Murdoch's kids are not ready to manage the sprawling businesses that generated $33 billion in revenue last fiscal year. What's more, it would be a particularly awkward time for a major executive transition because the recession has hammered media companies that depend on advertising and consumer spending for such non-essential purchases as DVDs.

Last week, News Corp. reported a $6.4-billion loss for the quarter ended Dec. 31. Its stock is down 65% from a 52-week high of $20.49. 

During a conference call with analysts to discuss the results, Chernin seemed to play a less prominent role than he has in the past. Murdoch dominated the session, fielding questions about the entertainment properties that have long been Chernin's specialty.

Then there was the sticky issue of Chernin's contract.

Back during November's earnings call, when Murdoch and Chernin were asked to characterize the negotiations, Chernin called them "constructive." Murdoch quickly jumped in:  "I would characterize them as constructive and friendly."

But last week, the same question prompted a more measured response. "Peter and I are continuing our conversations and they're private and that is all there is to it," Murdoch said.  "Nothing more for me to say and we won't take any further questions on that. It is a confidential matter."

Chernin remained silent.

Murdoch's tour through Los Angeles is part of a strategic review of the company's businesses that takes place every three years, say people familiar with the situation who did not want to be identified in discussing the sensitive subject. Murdoch will hold two more weeks of meetings with top Fox executives this month in New York.

If Chernin were to leave News Corp., he would be available to step into the top job at any number of troubled media companies, of which there appears to be no shortage.

People close to Chernin said it would be hasty to draw a conclusion about Chernin's tenure and Murdoch's visit (the CEO comes here more often than people think, they said). Chernin, 57, has been known to take his employment negotiations down to the wire.  His last contract renewal, in July 2004, was announced three days before the new agreement went into effect.

— Dawn C. Chmielewski and Meg James   

Photo: Daniel Acker/Bloomberg News

Billionaire Sumner Redstone, who has been under pressure to restructure his family company's $1.6 billion in debt, said this morning that "substantial progress" had been made in talks with banks.

"An agreement is now within reach," the 85-year-old Redstone said during a conference call to discuss Viacom Inc.'s  quarterly earnings.

In October, Redstone got caught in the stock-market avalanche, which created a credit crisis for the mogul, who owns controlling stakes in Viacom -- which owns MTV, Nickelodeon, Comedy Central and Paramount Pictures movie studio -- and television and radio broadcasting behemoth CBS Corp.

His family company, National Amusements Inc., was forced to sell non-voting shares in Viacom and CBS at record-low prices to come up with cash to satisfy bankers after National Amusements defaulted on bank loans.   Since late last fall, National Amusements -- led by Redstone's daughter, Shari Redstone -- has been working closely with banks to restructure the company's debt. 

A December deadline for National Amusements to repay $800 million in bank loans was extended into this year, a signal that the elder Redstone might be able to pull off his high-wire credit act and save his media empire. In December, National Amusements jettisoned its ailing video-game company and said that it would sell some of its movie theaters to pay down debt.

Redstone did not say when he expected an agreement would be reached, and he declined to answer questions.  However, two people close to National Amusements said this week that a deal could come within the the next few weeks.

-- Meg James

DreamWorks Animation Chief Executive Jeffrey Katzenberg made a mea culpa on Wednesday, saying that the Motion Picture & Television Fund had done a poor job of communicating the reasons for its decision to close the hospital and nursing home.

"We give ourselves a failing grade,"  said Katzenberg, who chairs the charity's fundraising board. "This has not been communicated well."

But Katzenberg and other board members stood by their decision, describing it as a necessary move to preserve the viability of the organization and its various other programs, which includes six healthcare centers, child care services and a retirement community in Woodland Hills with 215 residents.

"We have made a decision that allows this incredibly important enterprise to live on and have a great future," he said during a conference call with reporters, aimed at quelling fury among the residents' family members who are angry over the facility's closure.

David Tillman, the fund's CEO, said there was a $20-million gap between program revenues and the cost of services that was projected to widen because of rising medical costs and declining reimbursements from the government. In the past, he said, the fund could rely on investment income and philanthropy to make up the shortfall, but that option is no longer possible because of the deep recession.

Frank Mancuso, chairman of the fund's corporate board, said that the board had already taken various steps to stem losses, including closing the hospital's costly intensive care unit, but had run out of options. "We left no stone unturned," he said.

-- Richard Verrier

While several of Hollywood's financially strained independent production companies have either gone under or drastically scaled back operations over the past year, Fred Smith -- the founder and chief executive of FedEx Corp. -- says he's still committed to his side business: investing in movies.

For more than a decade, the Hollywood outsider who lives in Memphis, Tenn., has quietly bankrolled Alcon Entertainment, the boutique production outfit behind such films as "My Dog Skip" and "The Sisterhood of the Traveling Pants" series. His company may not be known for any blockbuster success and has had some box-office losers like the romantic comedy "Chasing Liberty" and its debut movie, "Lost & Found." But Smith claims that, thanks to solid performers such as the romantic drama "P.S. I Love You," starring Hilary Swank and Gerald Butler, and continued financial discipline, Alcon has been a profitable venture.

He attributes the company's stamina in what he readily acknowledges is "a very tough business" to the cost-conscious "no-limos" philosophy guiding Alcon's two chief executives, Andrew Kosove and Broderick Johnson. Despite being a Yalie, Smith hired the two Princeton alums after meeting them in 1994 and being impressed with their 220-page business plan for launching a movie company.

Smith said the duo's success lies in the fact that the pair has stuck to their original strategy for lowering risks inherent to the unpredictable movie business: Keep film budgets tight and overhead low; focus on specific genres like family films; and have a strong studio partner to help market and distribute the pictures (Alcon has a multi-year distribution deal with Warner Bros. and typically sells off the international rights in its films to help finance them).

"Those three things have proven that we're the exception to the rule," Smith said when he dropped by The Times to talk about the toll that the bad economy is taking on his main business --delivering packages.

Smith ducked a question about how much of his own money he's invested in the movie business. "It's mostly been done with borrowed money," he says, noting Alcon's good fortune last year in securing a $500-million bank loan before those kind of "slate-financing" deals dried up. Smith says he used his own FedEx stock to secure the loan.

The entrepreneur, who leaves the day-to-day running of Alcon to his two movie chiefs, says he reads the occasional script and rarely visits the set of his company's movies.

His personal Alcon favorite? Smith says its Jay Russell's family movie, "My Dog Skip," based on Willie Morris' World War II memoir about a boy and his dog growing up in a small Southern town. Made for $7 million, the 2000 release grossed $35 million at the worldwide box office and did well on video. Smith said he defies anyone to watch the movie "without a tear in their eye."

Smith insists he doesn't regret his own failings as a would-be movie star. He jokes that any ambitions he may have harbored were "left on the cutting-room floor" when his three-minute cameo in Fox's 2000 "Cast Away," starring Tom Hanks as a FedEx executive in a modern-day version of Robinson Crusoe, was "so bad, so atrocious, it was cut to 18 seconds."

--Claudia Eller

Steven Spielberg's DreamWorks finalized a distribution deal with Disney today, giving the filmmaker key financial demands he failed to extract from his longtime studio alley Universal Pictures: a commitment to risk hundreds of millions in film prints and advertising costs and to share its valuable pay TV slots.

As part of the deal, Disney will also give DreamWorks -- which has been struggling to raise money for its new studio -- a cash advance of about $100 million and a potential $75-million credit line which Spielberg & Co. can draw on for future productions. Disney's total outlay of $175 million is taking the form of a loan and is not an equity investment.

But, here's the catch. While DreamWorks desperately needs the cash advance to get its slate of movies rolling, it can't access Disney's money until it raises the first phase of its debt financing -- $325 million -- which will trigger a matching equity investment by Spielberg's new studio partner India's Reliance Entertainment.

"Disney has given us all the support we need to be in a position to raise our money and launch our company," said Stacey Snider, partner and chief executive of DreamWorks.

DreamWorks initially hoped to close its bank financing by the the end of the first quarter, but that now appears to be unlikely. A person close to the matter said that a more realistic time frame is late April.

Spielberg and Reliance will continue to fund overhead at DreamWorks, which employs about 60 people, until the deal is completed.

Disney's distribution agreement calls for DreamWorks to deliver up to 30 movies over the term of the deal. DreamWorks hopes to make up to six films a year for Disney's Touchstone Films banner. The first release -- yet to be identified -- will be in 2010.

Disney will market and release the movies worldwide everywhere except India, where Mumbai-based Reliance retains the distribution rights.

The Burbank studio will advance all the prints and advertising costs in exchange for collecting a distribution fee of what could amount to as much as 10%.

DreamWorks will also be able to piggyback on Disney's pay cable deal with Starz Entertainment, which provides movie producers with a significant revenue stream worth hundreds of millions of dollars. Last year, DreamWorks had failed at an attempt to secure its own pay-TV deal with HBO.

Spielberg hooked up with Reliance last year in a 50-50 venture to relaunch DreamWorks as a new studio with hoped-for funding of $1.25 billion. Reliance agreed to match in equity what DreamWorks raises in debt, but those efforts have been greatly hampered by the global credit crisis.

Surprising news of a pending deal between DreamWorks and Disney came late last week after a previously announced agreement between the Spielberg studio and Universal Pictures fell apart. Last fall, Universal had beat Disney and other potential distributors to the punch by cinching the right to distribute DreamWorks new movies. But, as DreamWorks' attempts to raise all of its funding by early this year became derailed by the financial markets, Spielberg and Reliance put pressure on Universal to change the original terms of its distribution deal.

Among sticking points between Universal and DreamWorks was that Universal refused to put up hundreds of millions in funds for prints and ads of DreamWorks movies -- an extremely risky investment in the volatile film business. DreamWorks also wanted more movie slots from Universal's deal with HBO than the studio was able to provide.

-- Claudia Eller

Left photo: Steven Spielberg. Credit: Hector Mata / AFP

Right photo: Stacey Snider. Credit: Vince Bucci / Getty Images

Think of it as a repeat of the swearing-in of President Obama in "an excess of prudence."

The Screen Actors Guild board voted for a second time to oust former executive director Doug Allen and replace the union's negotiating committee with a newly appointed task force dominated by moderates.

The move was widely anticipated, given that the board had previously taken such a vote last month by means of a "written assent."

That action, however, was challenged in a lawsuit filed last week by SAG President Alan Rosenberg and three other directors. Rosenberg has been a staunch ally of Allen and had refused to accept the board's appointment of David White as interim executive director and John McGuire as SAG's new chief negotiator. Last week, a judge denied a request for a temporary restraining order, saying the board had acted within its rights.

Sunday's vote -- supported by 59% of the 71-member board -- delivers a further blow to Rosenberg's legal challenge, which had threatened to delay a resumption in long-stalled contract negotiations with the studios. Talks are expected to resume on Feb. 17.

-- Richard Verrier

DreamWorks' planned distribution deal with Universal Pictures has collapsed as the parties are unable to agree upon final terms.

The failure of the agreement paves the way for Walt Disney Studios, which had earlier sought a distribution deal with DreamWorks, to step in as Steven Spielberg's new studio home, according to people familiar with the situation.

DreamWorks has been struggling for months to raise funds for its new studio, but efforts to raise the debt portion of its desired $1.25 billion in financing has been hampered by the global credit crisis.

DreamWorks, which split from former owner Paramount Pictures last year, is in need of some serious cash to continue financing overhead and jump-start plans to make about six movies a year. Spielberg's businesss partner, India's Reliance Entertainment, will not put up the equity portion of the financing until DreamWorks secures a matching sum in debt. DreamWorks' lead bank, JPMorgan Chase, so far has received a commitment for less than half of the $325-million loan that Spielberg hopes to have by late March. At that point, Reliance would match the bank contribution. DreamWorks is seeking to raise a total of about $1.25 billion in equity and debt.

Reliance had been pressuring Universal to advance DreamWorks at least $150 million in interim financing. But Universal, which in October announced a multi-year distribution deal with DreamWorks, balked and this morning announced it had halted talks with DreamWorks. "Over the past several weeks DreamWorks has demanded material changes to previously agreed-upon terms. It is clear DreamWorks' needs and Universal's business interests are no longer in alignment," Universal said.

Disney, which had been one of several DreamWorks distribution suitors, is in talks with the Spielberg camp and apparently willing to step in and make the investment needed by the filmmaker. Disney has always been Plan B, although Spielberg's first choice was Universal, where he began his career. Spielberg's creative partner Stacey Snider, who runs DreamWorks, used to be chairwoman of Universal Pictures.

This is the second time that Universal let DreamWorks slip away over money issues. Before being sold to Paramount in 2006 for $1.6 billion, DreamWorks had been in serious negotiations with Universal. But at the eleventh hour, Universal lowered its acquisition offer and the deal fell apart.

-- Claudia Eller

UPDATED at 4:59 p.m.:  With a judge having denied a temporary restraining order sought by Screen Actors Guild President Alan Rosenberg, the major studios are expected  to resume contract negotiations with the union. Talks have been tentatively scheduled for Feb. 17 and 18, sources familiar with the talks say.

A judge rebuffed for the second time a bid by Screen Actors Guild President Alan Rosenberg to block the union's new negotiating team from reviving contract talks with the major studios.

Rosenberg and three other board members filed a lawsuit this week seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee. They maintained the vote, taken by means of a "written assent," violated the state's business laws and the union's own bylaws.

But Los Angeles Superior Court Judge James Chalfant denied the request for a temporary restraining order, ruling that the board's action complied with the state law governing corporations. He also rejected arguments by Rosenberg's attorneys that a two-third vote was required to disband the committee.

The judge's decision removes what would have been an embarrassing setback for SAG. A restraining order could have unseated the union's newly appointed interim executive director and chief negotiator. They were tapped by the board after it fired former Executive Director Doug Allen, contending he mishandled negotiations.

Nonetheless, Thursday's ruling, which didn't dismiss the overall case, doesn't end the uncertainty over when contract negotiations with the studios will resume. Actors have been without a contract since June 30, 2008. SAG postponed planned negotiating sessions earlier this week because of the fight with its union president. 

And it's unlikely studios would agree to return to the bargaining table as long as there is a pending lawsuit challenging the legitimacy of negotiations.

Eric George, attorney for Rosenberg and the other directors, said he would file an appeal in the next few days with the California Court of Appeal.

Ned Vaughn, spokesman for the Unite for Strength group that represents so-called moderate board members, hailed the judge's ruling and called on Rosenberg to drop his complaint.

"It's outrageous that this lawsuit has further delayed negotiations,'' he said. "It's time for Alan Rosenberg to drop this and accept that SAG members voted for change. They want it now."

Rosenberg, who attended Thursday's hearing, declined to comment.

Thursday's ruling marked a second setback for Rosenberg, whose initial appeal for an injunction was denied after the judge cited several technical errors in the complaint.

“I’m pleased that we can put this matter behind us and dedicate our complete focus to the needs of Screen Actors Guild members. There’s a lot of work ahead of us,” said SAG interim National Executive Director David White.

-- Richard Verrier

Is French media giant Vivendi souring on its investment in NBC Universal -- perhaps un petit peu?

Mais non, says Vivendi Chief Executive Jean-Bernard Levy.

Nonetheless, Vivendi plans to write down the value of its 20% stake in NBC Universal next month when the French company reports its quarterly earnings. For now, Vivendi won't discuss the amount of the anticipated noncash charge, which is necessary to reflect the lower valuation of the U.S. company that boasts the NBC broadcast network, cable channels USA Network, Bravo and MSNBC, and Universal Studios. 

General Electric Co., whose stock has been pummeled in the market meltdown, owns the controlling 80% of NBC Universal. When GE and Vivendi combined their entertainment properties in 2004 to create NBC Universal, the enterprise was valued at more than $40 billion, making Vivendi's portion worth around $8 billion. (GE reiterated Tuesday that it had no plans to reduce the value of NBC that it carries on its battered books.) 

"It's a tough environment, but we are very pleased with NBC," Levy said during an interview in Santa Monica. "We are pleased with the profits that NBC has achieved; the overall performance of NBC U has been very good." 

Vivendi had an opportunity in December to divest its stake in NBC Universal  -- but it chose not to. The timing was not right because of the U.S. media company's depressed trading multiples, Levy said. Vivendi intends to hang on to its interest until the market bounces back.

How long will Vivendi be part of the peacock company? Levy would not tip his hand other than to say, "We are not long-term owners." He added that his company prefers to be in the "driver's seat" of its investments, and that is not the case with NBC.

Still, Levy is a big fan of the guy behind the wheel, NBC Universal CEO Jeff Zucker.

"I like him very much, he is an excellent manager and he certainly knows his business," Levy said of Zucker. The two CEOs spent time together last weekend in Tampa, where they attended the Super Bowl, which was televised by NBC and generated huge ratings.

Levy now is expecting Zucker to make similar gains in the financial field. "We are happy that we will share in the potential value creation that he and his team will implement," Levy said.

-- Meg James

Photo of Vivendi CEO Jean-Bernard Levy by Alex Pham/Los Angeles Times

A judge on Tuesday denied a temporary restraining order sought by SAG President Alan Rosenberg to block negotiations between the union and the major studios.

Rosenberg and three other board members are seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee, contending that the action violated the state's corporate code.

But Los Angeles Superior Court Judge James Chalfant denied the request for an injunction, citing several technical errors in the lawsuit, and ordered that the complaint be resubmitted. A hearing on the case will be held Thursday. The litigation has delayed contract negotiations that were set to resume this week.

"They are so desperate to hold on to their power that they are willing to burn down their own house,'' said New York SAG President Sam Freed, one of the board members being sued. Rosenberg declined to comment.

-- Richard Verrier

Financial news network Bloomberg Television today pulled the plug on its "Night Talk" program and bid goodbye to longtime anchor Mike Schneider.

Schneider's last program was Monday night.

Additional staff cuts and TV programming lineup changes are expected to be announced Wednesday. The moves are part of broad restructuring of the multimedia group, which includes Bloomberg Television and Bloomberg Radio, a person familiar with the situation said.

The private company, founded by New York Mayor Michael Bloomberg, generates about $6 billion a year in revenue.

But the shuffle has already begun. Bloomberg Television Managing Editor John Meehan left the company last week. His departure comes four months after former NBC, CBS and Sony BMG Music executive Andy Lack was hired to manage Bloomberg's television and radio operations. Lack brought in David Rhodes from the Fox News Channel to run the television operations.

Bloomberg operates 24 hours a day and has TV channels in 11 countries, but its sprawling operations are seen as disjointed and not making full use of its team of reporters in 143 bureaus around the world.

Although the company plans to eliminate programs and trim employees, it plans to hire additional staff this year to improve its programming to better position the company for growth, said the person familiar with the situation.

"While other news organizations are shrinking, we continue to expand, improving our existing products while investing in new ones," Bloomberg Chairman Peter Grauer said in a statement in October when Lack was hired.

-- Meg James

Summit Entertainment and Lionsgate aren't getting hitched. At least not yet, if ever.

The idea has been broached, according to insiders, but nothing is cooking. Such a corporate marriage, were it to happen, would unite a suddenly hot movie production company with Hollywood's leading independent movie and TV studio, which is behind the "Saw" and "Tyler Perry" franchises.

So far, however, Summit has played hard to get.

A few weeks before the late November release of Summit's box office smash "Twilight," the company headed by Patrick Wachsberger and Rob Friedman, was approached by Lionsgate about a potential merger. Lionsgate, well aware of the teen vampire film's hot pre-release buzz, made an offer for Summit but was rebuffed because the price was too low.

Lionsgate and Summit, which are located right around the corner from each other in Santa Monica, say privately that there have been no formal talks since last fall. That's not to say that Lionsgate Chief Executive Jon Feltheimer and Summit's Friedman, who are golfing buddies, would never discuss it between rounds. Who knows?

After all, "Twilight," which was made for $37 million and grossed $341 million worldwide, is a highly prized new movie franchise, one that would fit nicely with Lionsgate's strategy of producing moderately budgeted movies targeted at a specific audience. The sequel, "New Moon," based on the second novel of author Stephenie Meyer's popular four-book series, is due in theaters Nov. 25 of this year. The first film's director, Catherine Hardwicke, dropped out for the next installment and was replaced by Chris Weitz, whose previous credits include "The Golden Compass" and "About a Boy."

"Twilight" put the nearly 2-year-old Summit on the Hollywood map. The start-up's first five releases included such box office flops as "Penelope," "Fly Me to the Moon" and "Sex Drive." Next up for the production and international sales company is "Push," a supernatural thriller with Dakota Fanning that opens Friday, and "Knowing," a mystery thriller starring Nicolas Cage, on March 20.

--Claudia Eller

Photos: Rob Friedman, left (Kevin Winter/Getty Images) and Jon Feltheimer (Vince Bucci/Getty Images)

To virtually no one's surprise, the Screen Actors Guild and the major studios announced late Wednesday that they will return to the negotiating table Tuesday to try to forge a new contract for actors.

The move comes only two days after SAG's board hired a new negotiator, John McGuire, and a new interim executive director, David White, following the ouster of Doug Allen. At the same time, the board formed a new "task force" to replace the previous negotating committee.

Moderates who orchestrated the shake-up are expected to move quickly to finalize a new contract, which will be modeled on deals secured over the past year by three other talent unions. Their challenge will be to obtain improvements over the studios' previous "final offer" that will be acceptable to members and demonstrate that the leadership didn't capitulate under pressure.

SAG members have been working without a contract since June 30.

-- Richard Verrier

Twentieth Century Fox has agreed to co-finance the third movie in the “Chronicles of Narnia” series, pending approval of the final script and shooting budget. If all goes as planned, Fox and Walden Media, which controls the movie rights to C.S. Lewis’ classic children's books, hope to begin production on "The Voyage of the Dawn Treader" by late summer so it will be ready for holiday 2010 release.

First, however, Fox and Walden have to hire a screenwriter to do another pass on the script that was last rewritten by Richard LaGravenese, whose credits include "Freedom Writers" and "The Horse Whisperer." The movie companies are looking to make the film for about $140 million. Michael Apted, who made "Amazing Grace" and the 1999 Bond flick "The World Is Not Enough," is on board to direct.

Fox is taking a financial gamble that Disney was unwilling to wage despite helping bankroll the first two films in the "Narnia" family franchise. Walden, owned by entrepreneur Phil Anschutz, was forced to seek a new financial partner on “Dawn Treader” after Disney balked at the cost and opted out.

Fox was the most likely partner because the studio already markets and distributes Walden movies under its Fox Walden label.

Over the last few weeks, Walden chief David Weil and “Narnia” producer Mark Johnson have held a series of meetings with top Fox executives, including movie chiefs Tom Rothman and Jim Gianopulos, to discuss script revisions and the movie's cost.

While the targeted budget of “Dawn Treader” is much lower than that of the last Narnia movie, “Prince Caspian,” which cost $225 million to produce, it's still a big gamble. Released by Disney last year, the sequel was much less popular than the first "Narnia" movie, “The Lion, the Witch and the Wardrobe.” The sequel grossed $419 million worldwide compared with its 2005 predecessor, which generated $745 million in ticket sales.

Disney and Walden hope that DVD sales of "Prince Caspian" will help pull the movie out of the red.

-- Claudia Eller

Photo: "The Chronicles of Narnia: Prince Caspian" is courtesy of Walt Disney Studios

Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.

The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies. 

A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.

A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Murdoch Fox strategic review spurs Chernin speculation

News Corp. Chief Executive Rupert Murdoch (above right) is in Los Angeles this week and next week to meet with top Fox executives on the West Coast.

Murdoch's presence, and his scrutiny of the company's entertainment businesses, has prompted increased speculation that Peter Chernin (above left), president and chief operating officer of News Corp., actually might be leaving the company after 20 years.  Chernin's contract expires in June.  Chernin has been particularly tight-lipped about his plans, fueling anxiety among Fox executives who want to keep Chernin, who is admired by both Wall Street and Hollywood power players.

Chernin declined to comment.

Murdoch flew into Los Angeles from Australia this week after celebrating the 100th birthday of his mother, Dame Elisabeth Murdoch, along with about 600 friends. The 77-year-old Murdoch is fond of saying that his mum's longevity bodes well for his own prospects of remaining at the helm of News Corp. for many more years.

Succession issues have bedeviled the company because Murdoch wants one of his children (he has six) to eventually run the global media empire that includes the 20th Century Fox film studio, Fox Broadcasting network, cable television outlets that include Fox News Channel, social network MySpace and a string of newspapers that includes his recently acquired jewel, The Wall Street Journal. 

Some on Wall Street worry that Murdoch's kids are not ready to manage the sprawling businesses that generated $33 billion in revenue last fiscal year. What's more, it would be a particularly awkward time for a major executive transition because the recession has hammered media companies that depend on advertising and consumer spending for such non-essential purchases as DVDs.

Last week, News Corp. reported a $6.4-billion loss for the quarter ended Dec. 31. Its stock is down 65% from a 52-week high of $20.49. 

During a conference call with analysts to discuss the results, Chernin seemed to play a less prominent role than he has in the past. Murdoch dominated the session, fielding questions about the entertainment properties that have long been Chernin's specialty.

Then there was the sticky issue of Chernin's contract.

Back during November's earnings call, when Murdoch and Chernin were asked to characterize the negotiations, Chernin called them "constructive." Murdoch quickly jumped in:  "I would characterize them as constructive and friendly."

But last week, the same question prompted a more measured response. "Peter and I are continuing our conversations and they're private and that is all there is to it," Murdoch said.  "Nothing more for me to say and we won't take any further questions on that. It is a confidential matter."

Chernin remained silent.

Murdoch's tour through Los Angeles is part of a strategic review of the company's businesses that takes place every three years, say people familiar with the situation who did not want to be identified in discussing the sensitive subject. Murdoch will hold two more weeks of meetings with top Fox executives this month in New York.

If Chernin were to leave News Corp., he would be available to step into the top job at any number of troubled media companies, of which there appears to be no shortage.

People close to Chernin said it would be hasty to draw a conclusion about Chernin's tenure and Murdoch's visit (the CEO comes here more often than people think, they said). Chernin, 57, has been known to take his employment negotiations down to the wire.  His last contract renewal, in July 2004, was announced three days before the new agreement went into effect.

— Dawn C. Chmielewski and Meg James   

Photo: Daniel Acker/Bloomberg News

Billionaire Sumner Redstone, who has been under pressure to restructure his family company's $1.6 billion in debt, said this morning that "substantial progress" had been made in talks with banks.

"An agreement is now within reach," the 85-year-old Redstone said during a conference call to discuss Viacom Inc.'s  quarterly earnings.

In October, Redstone got caught in the stock-market avalanche, which created a credit crisis for the mogul, who owns controlling stakes in Viacom -- which owns MTV, Nickelodeon, Comedy Central and Paramount Pictures movie studio -- and television and radio broadcasting behemoth CBS Corp.

His family company, National Amusements Inc., was forced to sell non-voting shares in Viacom and CBS at record-low prices to come up with cash to satisfy bankers after National Amusements defaulted on bank loans.   Since late last fall, National Amusements -- led by Redstone's daughter, Shari Redstone -- has been working closely with banks to restructure the company's debt. 

A December deadline for National Amusements to repay $800 million in bank loans was extended into this year, a signal that the elder Redstone might be able to pull off his high-wire credit act and save his media empire. In December, National Amusements jettisoned its ailing video-game company and said that it would sell some of its movie theaters to pay down debt.

Redstone did not say when he expected an agreement would be reached, and he declined to answer questions.  However, two people close to National Amusements said this week that a deal could come within the the next few weeks.

-- Meg James

DreamWorks Animation Chief Executive Jeffrey Katzenberg made a mea culpa on Wednesday, saying that the Motion Picture & Television Fund had done a poor job of communicating the reasons for its decision to close the hospital and nursing home.

"We give ourselves a failing grade,"  said Katzenberg, who chairs the charity's fundraising board. "This has not been communicated well."

But Katzenberg and other board members stood by their decision, describing it as a necessary move to preserve the viability of the organization and its various other programs, which includes six healthcare centers, child care services and a retirement community in Woodland Hills with 215 residents.

"We have made a decision that allows this incredibly important enterprise to live on and have a great future," he said during a conference call with reporters, aimed at quelling fury among the residents' family members who are angry over the facility's closure.

David Tillman, the fund's CEO, said there was a $20-million gap between program revenues and the cost of services that was projected to widen because of rising medical costs and declining reimbursements from the government. In the past, he said, the fund could rely on investment income and philanthropy to make up the shortfall, but that option is no longer possible because of the deep recession.

Frank Mancuso, chairman of the fund's corporate board, said that the board had already taken various steps to stem losses, including closing the hospital's costly intensive care unit, but had run out of options. "We left no stone unturned," he said.

-- Richard Verrier

While several of Hollywood's financially strained independent production companies have either gone under or drastically scaled back operations over the past year, Fred Smith -- the founder and chief executive of FedEx Corp. -- says he's still committed to his side business: investing in movies.

For more than a decade, the Hollywood outsider who lives in Memphis, Tenn., has quietly bankrolled Alcon Entertainment, the boutique production outfit behind such films as "My Dog Skip" and "The Sisterhood of the Traveling Pants" series. His company may not be known for any blockbuster success and has had some box-office losers like the romantic comedy "Chasing Liberty" and its debut movie, "Lost & Found." But Smith claims that, thanks to solid performers such as the romantic drama "P.S. I Love You," starring Hilary Swank and Gerald Butler, and continued financial discipline, Alcon has been a profitable venture.

He attributes the company's stamina in what he readily acknowledges is "a very tough business" to the cost-conscious "no-limos" philosophy guiding Alcon's two chief executives, Andrew Kosove and Broderick Johnson. Despite being a Yalie, Smith hired the two Princeton alums after meeting them in 1994 and being impressed with their 220-page business plan for launching a movie company.

Smith said the duo's success lies in the fact that the pair has stuck to their original strategy for lowering risks inherent to the unpredictable movie business: Keep film budgets tight and overhead low; focus on specific genres like family films; and have a strong studio partner to help market and distribute the pictures (Alcon has a multi-year distribution deal with Warner Bros. and typically sells off the international rights in its films to help finance them).

"Those three things have proven that we're the exception to the rule," Smith said when he dropped by The Times to talk about the toll that the bad economy is taking on his main business --delivering packages.

Smith ducked a question about how much of his own money he's invested in the movie business. "It's mostly been done with borrowed money," he says, noting Alcon's good fortune last year in securing a $500-million bank loan before those kind of "slate-financing" deals dried up. Smith says he used his own FedEx stock to secure the loan.

The entrepreneur, who leaves the day-to-day running of Alcon to his two movie chiefs, says he reads the occasional script and rarely visits the set of his company's movies.

His personal Alcon favorite? Smith says its Jay Russell's family movie, "My Dog Skip," based on Willie Morris' World War II memoir about a boy and his dog growing up in a small Southern town. Made for $7 million, the 2000 release grossed $35 million at the worldwide box office and did well on video. Smith said he defies anyone to watch the movie "without a tear in their eye."

Smith insists he doesn't regret his own failings as a would-be movie star. He jokes that any ambitions he may have harbored were "left on the cutting-room floor" when his three-minute cameo in Fox's 2000 "Cast Away," starring Tom Hanks as a FedEx executive in a modern-day version of Robinson Crusoe, was "so bad, so atrocious, it was cut to 18 seconds."

--Claudia Eller

Steven Spielberg's DreamWorks finalized a distribution deal with Disney today, giving the filmmaker key financial demands he failed to extract from his longtime studio alley Universal Pictures: a commitment to risk hundreds of millions in film prints and advertising costs and to share its valuable pay TV slots.

As part of the deal, Disney will also give DreamWorks -- which has been struggling to raise money for its new studio -- a cash advance of about $100 million and a potential $75-million credit line which Spielberg & Co. can draw on for future productions. Disney's total outlay of $175 million is taking the form of a loan and is not an equity investment.

But, here's the catch. While DreamWorks desperately needs the cash advance to get its slate of movies rolling, it can't access Disney's money until it raises the first phase of its debt financing -- $325 million -- which will trigger a matching equity investment by Spielberg's new studio partner India's Reliance Entertainment.

"Disney has given us all the support we need to be in a position to raise our money and launch our company," said Stacey Snider, partner and chief executive of DreamWorks.

DreamWorks initially hoped to close its bank financing by the the end of the first quarter, but that now appears to be unlikely. A person close to the matter said that a more realistic time frame is late April.

Spielberg and Reliance will continue to fund overhead at DreamWorks, which employs about 60 people, until the deal is completed.

Disney's distribution agreement calls for DreamWorks to deliver up to 30 movies over the term of the deal. DreamWorks hopes to make up to six films a year for Disney's Touchstone Films banner. The first release -- yet to be identified -- will be in 2010.

Disney will market and release the movies worldwide everywhere except India, where Mumbai-based Reliance retains the distribution rights.

The Burbank studio will advance all the prints and advertising costs in exchange for collecting a distribution fee of what could amount to as much as 10%.

DreamWorks will also be able to piggyback on Disney's pay cable deal with Starz Entertainment, which provides movie producers with a significant revenue stream worth hundreds of millions of dollars. Last year, DreamWorks had failed at an attempt to secure its own pay-TV deal with HBO.

Spielberg hooked up with Reliance last year in a 50-50 venture to relaunch DreamWorks as a new studio with hoped-for funding of $1.25 billion. Reliance agreed to match in equity what DreamWorks raises in debt, but those efforts have been greatly hampered by the global credit crisis.

Surprising news of a pending deal between DreamWorks and Disney came late last week after a previously announced agreement between the Spielberg studio and Universal Pictures fell apart. Last fall, Universal had beat Disney and other potential distributors to the punch by cinching the right to distribute DreamWorks new movies. But, as DreamWorks' attempts to raise all of its funding by early this year became derailed by the financial markets, Spielberg and Reliance put pressure on Universal to change the original terms of its distribution deal.

Among sticking points between Universal and DreamWorks was that Universal refused to put up hundreds of millions in funds for prints and ads of DreamWorks movies -- an extremely risky investment in the volatile film business. DreamWorks also wanted more movie slots from Universal's deal with HBO than the studio was able to provide.

-- Claudia Eller

Left photo: Steven Spielberg. Credit: Hector Mata / AFP

Right photo: Stacey Snider. Credit: Vince Bucci / Getty Images

Think of it as a repeat of the swearing-in of President Obama in "an excess of prudence."

The Screen Actors Guild board voted for a second time to oust former executive director Doug Allen and replace the union's negotiating committee with a newly appointed task force dominated by moderates.

The move was widely anticipated, given that the board had previously taken such a vote last month by means of a "written assent."

That action, however, was challenged in a lawsuit filed last week by SAG President Alan Rosenberg and three other directors. Rosenberg has been a staunch ally of Allen and had refused to accept the board's appointment of David White as interim executive director and John McGuire as SAG's new chief negotiator. Last week, a judge denied a request for a temporary restraining order, saying the board had acted within its rights.

Sunday's vote -- supported by 59% of the 71-member board -- delivers a further blow to Rosenberg's legal challenge, which had threatened to delay a resumption in long-stalled contract negotiations with the studios. Talks are expected to resume on Feb. 17.

-- Richard Verrier

DreamWorks' planned distribution deal with Universal Pictures has collapsed as the parties are unable to agree upon final terms.

The failure of the agreement paves the way for Walt Disney Studios, which had earlier sought a distribution deal with DreamWorks, to step in as Steven Spielberg's new studio home, according to people familiar with the situation.

DreamWorks has been struggling for months to raise funds for its new studio, but efforts to raise the debt portion of its desired $1.25 billion in financing has been hampered by the global credit crisis.

DreamWorks, which split from former owner Paramount Pictures last year, is in need of some serious cash to continue financing overhead and jump-start plans to make about six movies a year. Spielberg's businesss partner, India's Reliance Entertainment, will not put up the equity portion of the financing until DreamWorks secures a matching sum in debt. DreamWorks' lead bank, JPMorgan Chase, so far has received a commitment for less than half of the $325-million loan that Spielberg hopes to have by late March. At that point, Reliance would match the bank contribution. DreamWorks is seeking to raise a total of about $1.25 billion in equity and debt.

Reliance had been pressuring Universal to advance DreamWorks at least $150 million in interim financing. But Universal, which in October announced a multi-year distribution deal with DreamWorks, balked and this morning announced it had halted talks with DreamWorks. "Over the past several weeks DreamWorks has demanded material changes to previously agreed-upon terms. It is clear DreamWorks' needs and Universal's business interests are no longer in alignment," Universal said.

Disney, which had been one of several DreamWorks distribution suitors, is in talks with the Spielberg camp and apparently willing to step in and make the investment needed by the filmmaker. Disney has always been Plan B, although Spielberg's first choice was Universal, where he began his career. Spielberg's creative partner Stacey Snider, who runs DreamWorks, used to be chairwoman of Universal Pictures.

This is the second time that Universal let DreamWorks slip away over money issues. Before being sold to Paramount in 2006 for $1.6 billion, DreamWorks had been in serious negotiations with Universal. But at the eleventh hour, Universal lowered its acquisition offer and the deal fell apart.

-- Claudia Eller

UPDATED at 4:59 p.m.:  With a judge having denied a temporary restraining order sought by Screen Actors Guild President Alan Rosenberg, the major studios are expected  to resume contract negotiations with the union. Talks have been tentatively scheduled for Feb. 17 and 18, sources familiar with the talks say.

A judge rebuffed for the second time a bid by Screen Actors Guild President Alan Rosenberg to block the union's new negotiating team from reviving contract talks with the major studios.

Rosenberg and three other board members filed a lawsuit this week seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee. They maintained the vote, taken by means of a "written assent," violated the state's business laws and the union's own bylaws.

But Los Angeles Superior Court Judge James Chalfant denied the request for a temporary restraining order, ruling that the board's action complied with the state law governing corporations. He also rejected arguments by Rosenberg's attorneys that a two-third vote was required to disband the committee.

The judge's decision removes what would have been an embarrassing setback for SAG. A restraining order could have unseated the union's newly appointed interim executive director and chief negotiator. They were tapped by the board after it fired former Executive Director Doug Allen, contending he mishandled negotiations.

Nonetheless, Thursday's ruling, which didn't dismiss the overall case, doesn't end the uncertainty over when contract negotiations with the studios will resume. Actors have been without a contract since June 30, 2008. SAG postponed planned negotiating sessions earlier this week because of the fight with its union president. 

And it's unlikely studios would agree to return to the bargaining table as long as there is a pending lawsuit challenging the legitimacy of negotiations.

Eric George, attorney for Rosenberg and the other directors, said he would file an appeal in the next few days with the California Court of Appeal.

Ned Vaughn, spokesman for the Unite for Strength group that represents so-called moderate board members, hailed the judge's ruling and called on Rosenberg to drop his complaint.

"It's outrageous that this lawsuit has further delayed negotiations,'' he said. "It's time for Alan Rosenberg to drop this and accept that SAG members voted for change. They want it now."

Rosenberg, who attended Thursday's hearing, declined to comment.

Thursday's ruling marked a second setback for Rosenberg, whose initial appeal for an injunction was denied after the judge cited several technical errors in the complaint.

“I’m pleased that we can put this matter behind us and dedicate our complete focus to the needs of Screen Actors Guild members. There’s a lot of work ahead of us,” said SAG interim National Executive Director David White.

-- Richard Verrier

Is French media giant Vivendi souring on its investment in NBC Universal -- perhaps un petit peu?

Mais non, says Vivendi Chief Executive Jean-Bernard Levy.

Nonetheless, Vivendi plans to write down the value of its 20% stake in NBC Universal next month when the French company reports its quarterly earnings. For now, Vivendi won't discuss the amount of the anticipated noncash charge, which is necessary to reflect the lower valuation of the U.S. company that boasts the NBC broadcast network, cable channels USA Network, Bravo and MSNBC, and Universal Studios. 

General Electric Co., whose stock has been pummeled in the market meltdown, owns the controlling 80% of NBC Universal. When GE and Vivendi combined their entertainment properties in 2004 to create NBC Universal, the enterprise was valued at more than $40 billion, making Vivendi's portion worth around $8 billion. (GE reiterated Tuesday that it had no plans to reduce the value of NBC that it carries on its battered books.) 

"It's a tough environment, but we are very pleased with NBC," Levy said during an interview in Santa Monica. "We are pleased with the profits that NBC has achieved; the overall performance of NBC U has been very good." 

Vivendi had an opportunity in December to divest its stake in NBC Universal  -- but it chose not to. The timing was not right because of the U.S. media company's depressed trading multiples, Levy said. Vivendi intends to hang on to its interest until the market bounces back.

How long will Vivendi be part of the peacock company? Levy would not tip his hand other than to say, "We are not long-term owners." He added that his company prefers to be in the "driver's seat" of its investments, and that is not the case with NBC.

Still, Levy is a big fan of the guy behind the wheel, NBC Universal CEO Jeff Zucker.

"I like him very much, he is an excellent manager and he certainly knows his business," Levy said of Zucker. The two CEOs spent time together last weekend in Tampa, where they attended the Super Bowl, which was televised by NBC and generated huge ratings.

Levy now is expecting Zucker to make similar gains in the financial field. "We are happy that we will share in the potential value creation that he and his team will implement," Levy said.

-- Meg James

Photo of Vivendi CEO Jean-Bernard Levy by Alex Pham/Los Angeles Times

A judge on Tuesday denied a temporary restraining order sought by SAG President Alan Rosenberg to block negotiations between the union and the major studios.

Rosenberg and three other board members are seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee, contending that the action violated the state's corporate code.

But Los Angeles Superior Court Judge James Chalfant denied the request for an injunction, citing several technical errors in the lawsuit, and ordered that the complaint be resubmitted. A hearing on the case will be held Thursday. The litigation has delayed contract negotiations that were set to resume this week.

"They are so desperate to hold on to their power that they are willing to burn down their own house,'' said New York SAG President Sam Freed, one of the board members being sued. Rosenberg declined to comment.

-- Richard Verrier

Financial news network Bloomberg Television today pulled the plug on its "Night Talk" program and bid goodbye to longtime anchor Mike Schneider.

Schneider's last program was Monday night.

Additional staff cuts and TV programming lineup changes are expected to be announced Wednesday. The moves are part of broad restructuring of the multimedia group, which includes Bloomberg Television and Bloomberg Radio, a person familiar with the situation said.

The private company, founded by New York Mayor Michael Bloomberg, generates about $6 billion a year in revenue.

But the shuffle has already begun. Bloomberg Television Managing Editor John Meehan left the company last week. His departure comes four months after former NBC, CBS and Sony BMG Music executive Andy Lack was hired to manage Bloomberg's television and radio operations. Lack brought in David Rhodes from the Fox News Channel to run the television operations.

Bloomberg operates 24 hours a day and has TV channels in 11 countries, but its sprawling operations are seen as disjointed and not making full use of its team of reporters in 143 bureaus around the world.

Although the company plans to eliminate programs and trim employees, it plans to hire additional staff this year to improve its programming to better position the company for growth, said the person familiar with the situation.

"While other news organizations are shrinking, we continue to expand, improving our existing products while investing in new ones," Bloomberg Chairman Peter Grauer said in a statement in October when Lack was hired.

-- Meg James

Summit Entertainment and Lionsgate aren't getting hitched. At least not yet, if ever.

The idea has been broached, according to insiders, but nothing is cooking. Such a corporate marriage, were it to happen, would unite a suddenly hot movie production company with Hollywood's leading independent movie and TV studio, which is behind the "Saw" and "Tyler Perry" franchises.

So far, however, Summit has played hard to get.

A few weeks before the late November release of Summit's box office smash "Twilight," the company headed by Patrick Wachsberger and Rob Friedman, was approached by Lionsgate about a potential merger. Lionsgate, well aware of the teen vampire film's hot pre-release buzz, made an offer for Summit but was rebuffed because the price was too low.

Lionsgate and Summit, which are located right around the corner from each other in Santa Monica, say privately that there have been no formal talks since last fall. That's not to say that Lionsgate Chief Executive Jon Feltheimer and Summit's Friedman, who are golfing buddies, would never discuss it between rounds. Who knows?

After all, "Twilight," which was made for $37 million and grossed $341 million worldwide, is a highly prized new movie franchise, one that would fit nicely with Lionsgate's strategy of producing moderately budgeted movies targeted at a specific audience. The sequel, "New Moon," based on the second novel of author Stephenie Meyer's popular four-book series, is due in theaters Nov. 25 of this year. The first film's director, Catherine Hardwicke, dropped out for the next installment and was replaced by Chris Weitz, whose previous credits include "The Golden Compass" and "About a Boy."

"Twilight" put the nearly 2-year-old Summit on the Hollywood map. The start-up's first five releases included such box office flops as "Penelope," "Fly Me to the Moon" and "Sex Drive." Next up for the production and international sales company is "Push," a supernatural thriller with Dakota Fanning that opens Friday, and "Knowing," a mystery thriller starring Nicolas Cage, on March 20.

--Claudia Eller

Photos: Rob Friedman, left (Kevin Winter/Getty Images) and Jon Feltheimer (Vince Bucci/Getty Images)

To virtually no one's surprise, the Screen Actors Guild and the major studios announced late Wednesday that they will return to the negotiating table Tuesday to try to forge a new contract for actors.

The move comes only two days after SAG's board hired a new negotiator, John McGuire, and a new interim executive director, David White, following the ouster of Doug Allen. At the same time, the board formed a new "task force" to replace the previous negotating committee.

Moderates who orchestrated the shake-up are expected to move quickly to finalize a new contract, which will be modeled on deals secured over the past year by three other talent unions. Their challenge will be to obtain improvements over the studios' previous "final offer" that will be acceptable to members and demonstrate that the leadership didn't capitulate under pressure.

SAG members have been working without a contract since June 30.

-- Richard Verrier

Twentieth Century Fox has agreed to co-finance the third movie in the “Chronicles of Narnia” series, pending approval of the final script and shooting budget. If all goes as planned, Fox and Walden Media, which controls the movie rights to C.S. Lewis’ classic children's books, hope to begin production on "The Voyage of the Dawn Treader" by late summer so it will be ready for holiday 2010 release.

First, however, Fox and Walden have to hire a screenwriter to do another pass on the script that was last rewritten by Richard LaGravenese, whose credits include "Freedom Writers" and "The Horse Whisperer." The movie companies are looking to make the film for about $140 million. Michael Apted, who made "Amazing Grace" and the 1999 Bond flick "The World Is Not Enough," is on board to direct.

Fox is taking a financial gamble that Disney was unwilling to wage despite helping bankroll the first two films in the "Narnia" family franchise. Walden, owned by entrepreneur Phil Anschutz, was forced to seek a new financial partner on “Dawn Treader” after Disney balked at the cost and opted out.

Fox was the most likely partner because the studio already markets and distributes Walden movies under its Fox Walden label.

Over the last few weeks, Walden chief David Weil and “Narnia” producer Mark Johnson have held a series of meetings with top Fox executives, including movie chiefs Tom Rothman and Jim Gianopulos, to discuss script revisions and the movie's cost.

While the targeted budget of “Dawn Treader” is much lower than that of the last Narnia movie, “Prince Caspian,” which cost $225 million to produce, it's still a big gamble. Released by Disney last year, the sequel was much less popular than the first "Narnia" movie, “The Lion, the Witch and the Wardrobe.” The sequel grossed $419 million worldwide compared with its 2005 predecessor, which generated $745 million in ticket sales.

Disney and Walden hope that DVD sales of "Prince Caspian" will help pull the movie out of the red.

-- Claudia Eller

Photo: "The Chronicles of Narnia: Prince Caspian" is courtesy of Walt Disney Studios

Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.

The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies. 

A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.

A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Sumner Redstone: 'Substantial progress' on saving media empire

Billionaire Sumner Redstone, who has been under pressure to restructure his family company's $1.6 billion in debt, said this morning that "substantial progress" had been made in talks with banks.

"An agreement is now within reach," the 85-year-old Redstone said during a conference call to discuss Viacom Inc.'s  quarterly earnings.

In October, Redstone got caught in the stock-market avalanche, which created a credit crisis for the mogul, who owns controlling stakes in Viacom -- which owns MTV, Nickelodeon, Comedy Central and Paramount Pictures movie studio -- and television and radio broadcasting behemoth CBS Corp.

His family company, National Amusements Inc., was forced to sell non-voting shares in Viacom and CBS at record-low prices to come up with cash to satisfy bankers after National Amusements defaulted on bank loans.   Since late last fall, National Amusements -- led by Redstone's daughter, Shari Redstone -- has been working closely with banks to restructure the company's debt. 

A December deadline for National Amusements to repay $800 million in bank loans was extended into this year, a signal that the elder Redstone might be able to pull off his high-wire credit act and save his media empire. In December, National Amusements jettisoned its ailing video-game company and said that it would sell some of its movie theaters to pay down debt.

Redstone did not say when he expected an agreement would be reached, and he declined to answer questions.  However, two people close to National Amusements said this week that a deal could come within the the next few weeks.

-- Meg James

DreamWorks Animation Chief Executive Jeffrey Katzenberg made a mea culpa on Wednesday, saying that the Motion Picture & Television Fund had done a poor job of communicating the reasons for its decision to close the hospital and nursing home.

"We give ourselves a failing grade,"  said Katzenberg, who chairs the charity's fundraising board. "This has not been communicated well."

But Katzenberg and other board members stood by their decision, describing it as a necessary move to preserve the viability of the organization and its various other programs, which includes six healthcare centers, child care services and a retirement community in Woodland Hills with 215 residents.

"We have made a decision that allows this incredibly important enterprise to live on and have a great future," he said during a conference call with reporters, aimed at quelling fury among the residents' family members who are angry over the facility's closure.

David Tillman, the fund's CEO, said there was a $20-million gap between program revenues and the cost of services that was projected to widen because of rising medical costs and declining reimbursements from the government. In the past, he said, the fund could rely on investment income and philanthropy to make up the shortfall, but that option is no longer possible because of the deep recession.

Frank Mancuso, chairman of the fund's corporate board, said that the board had already taken various steps to stem losses, including closing the hospital's costly intensive care unit, but had run out of options. "We left no stone unturned," he said.

-- Richard Verrier

While several of Hollywood's financially strained independent production companies have either gone under or drastically scaled back operations over the past year, Fred Smith -- the founder and chief executive of FedEx Corp. -- says he's still committed to his side business: investing in movies.

For more than a decade, the Hollywood outsider who lives in Memphis, Tenn., has quietly bankrolled Alcon Entertainment, the boutique production outfit behind such films as "My Dog Skip" and "The Sisterhood of the Traveling Pants" series. His company may not be known for any blockbuster success and has had some box-office losers like the romantic comedy "Chasing Liberty" and its debut movie, "Lost & Found." But Smith claims that, thanks to solid performers such as the romantic drama "P.S. I Love You," starring Hilary Swank and Gerald Butler, and continued financial discipline, Alcon has been a profitable venture.

He attributes the company's stamina in what he readily acknowledges is "a very tough business" to the cost-conscious "no-limos" philosophy guiding Alcon's two chief executives, Andrew Kosove and Broderick Johnson. Despite being a Yalie, Smith hired the two Princeton alums after meeting them in 1994 and being impressed with their 220-page business plan for launching a movie company.

Smith said the duo's success lies in the fact that the pair has stuck to their original strategy for lowering risks inherent to the unpredictable movie business: Keep film budgets tight and overhead low; focus on specific genres like family films; and have a strong studio partner to help market and distribute the pictures (Alcon has a multi-year distribution deal with Warner Bros. and typically sells off the international rights in its films to help finance them).

"Those three things have proven that we're the exception to the rule," Smith said when he dropped by The Times to talk about the toll that the bad economy is taking on his main business --delivering packages.

Smith ducked a question about how much of his own money he's invested in the movie business. "It's mostly been done with borrowed money," he says, noting Alcon's good fortune last year in securing a $500-million bank loan before those kind of "slate-financing" deals dried up. Smith says he used his own FedEx stock to secure the loan.

The entrepreneur, who leaves the day-to-day running of Alcon to his two movie chiefs, says he reads the occasional script and rarely visits the set of his company's movies.

His personal Alcon favorite? Smith says its Jay Russell's family movie, "My Dog Skip," based on Willie Morris' World War II memoir about a boy and his dog growing up in a small Southern town. Made for $7 million, the 2000 release grossed $35 million at the worldwide box office and did well on video. Smith said he defies anyone to watch the movie "without a tear in their eye."

Smith insists he doesn't regret his own failings as a would-be movie star. He jokes that any ambitions he may have harbored were "left on the cutting-room floor" when his three-minute cameo in Fox's 2000 "Cast Away," starring Tom Hanks as a FedEx executive in a modern-day version of Robinson Crusoe, was "so bad, so atrocious, it was cut to 18 seconds."

--Claudia Eller

Steven Spielberg's DreamWorks finalized a distribution deal with Disney today, giving the filmmaker key financial demands he failed to extract from his longtime studio alley Universal Pictures: a commitment to risk hundreds of millions in film prints and advertising costs and to share its valuable pay TV slots.

As part of the deal, Disney will also give DreamWorks -- which has been struggling to raise money for its new studio -- a cash advance of about $100 million and a potential $75-million credit line which Spielberg & Co. can draw on for future productions. Disney's total outlay of $175 million is taking the form of a loan and is not an equity investment.

But, here's the catch. While DreamWorks desperately needs the cash advance to get its slate of movies rolling, it can't access Disney's money until it raises the first phase of its debt financing -- $325 million -- which will trigger a matching equity investment by Spielberg's new studio partner India's Reliance Entertainment.

"Disney has given us all the support we need to be in a position to raise our money and launch our company," said Stacey Snider, partner and chief executive of DreamWorks.

DreamWorks initially hoped to close its bank financing by the the end of the first quarter, but that now appears to be unlikely. A person close to the matter said that a more realistic time frame is late April.

Spielberg and Reliance will continue to fund overhead at DreamWorks, which employs about 60 people, until the deal is completed.

Disney's distribution agreement calls for DreamWorks to deliver up to 30 movies over the term of the deal. DreamWorks hopes to make up to six films a year for Disney's Touchstone Films banner. The first release -- yet to be identified -- will be in 2010.

Disney will market and release the movies worldwide everywhere except India, where Mumbai-based Reliance retains the distribution rights.

The Burbank studio will advance all the prints and advertising costs in exchange for collecting a distribution fee of what could amount to as much as 10%.

DreamWorks will also be able to piggyback on Disney's pay cable deal with Starz Entertainment, which provides movie producers with a significant revenue stream worth hundreds of millions of dollars. Last year, DreamWorks had failed at an attempt to secure its own pay-TV deal with HBO.

Spielberg hooked up with Reliance last year in a 50-50 venture to relaunch DreamWorks as a new studio with hoped-for funding of $1.25 billion. Reliance agreed to match in equity what DreamWorks raises in debt, but those efforts have been greatly hampered by the global credit crisis.

Surprising news of a pending deal between DreamWorks and Disney came late last week after a previously announced agreement between the Spielberg studio and Universal Pictures fell apart. Last fall, Universal had beat Disney and other potential distributors to the punch by cinching the right to distribute DreamWorks new movies. But, as DreamWorks' attempts to raise all of its funding by early this year became derailed by the financial markets, Spielberg and Reliance put pressure on Universal to change the original terms of its distribution deal.

Among sticking points between Universal and DreamWorks was that Universal refused to put up hundreds of millions in funds for prints and ads of DreamWorks movies -- an extremely risky investment in the volatile film business. DreamWorks also wanted more movie slots from Universal's deal with HBO than the studio was able to provide.

-- Claudia Eller

Left photo: Steven Spielberg. Credit: Hector Mata / AFP

Right photo: Stacey Snider. Credit: Vince Bucci / Getty Images

Think of it as a repeat of the swearing-in of President Obama in "an excess of prudence."

The Screen Actors Guild board voted for a second time to oust former executive director Doug Allen and replace the union's negotiating committee with a newly appointed task force dominated by moderates.

The move was widely anticipated, given that the board had previously taken such a vote last month by means of a "written assent."

That action, however, was challenged in a lawsuit filed last week by SAG President Alan Rosenberg and three other directors. Rosenberg has been a staunch ally of Allen and had refused to accept the board's appointment of David White as interim executive director and John McGuire as SAG's new chief negotiator. Last week, a judge denied a request for a temporary restraining order, saying the board had acted within its rights.

Sunday's vote -- supported by 59% of the 71-member board -- delivers a further blow to Rosenberg's legal challenge, which had threatened to delay a resumption in long-stalled contract negotiations with the studios. Talks are expected to resume on Feb. 17.

-- Richard Verrier

DreamWorks' planned distribution deal with Universal Pictures has collapsed as the parties are unable to agree upon final terms.

The failure of the agreement paves the way for Walt Disney Studios, which had earlier sought a distribution deal with DreamWorks, to step in as Steven Spielberg's new studio home, according to people familiar with the situation.

DreamWorks has been struggling for months to raise funds for its new studio, but efforts to raise the debt portion of its desired $1.25 billion in financing has been hampered by the global credit crisis.

DreamWorks, which split from former owner Paramount Pictures last year, is in need of some serious cash to continue financing overhead and jump-start plans to make about six movies a year. Spielberg's businesss partner, India's Reliance Entertainment, will not put up the equity portion of the financing until DreamWorks secures a matching sum in debt. DreamWorks' lead bank, JPMorgan Chase, so far has received a commitment for less than half of the $325-million loan that Spielberg hopes to have by late March. At that point, Reliance would match the bank contribution. DreamWorks is seeking to raise a total of about $1.25 billion in equity and debt.

Reliance had been pressuring Universal to advance DreamWorks at least $150 million in interim financing. But Universal, which in October announced a multi-year distribution deal with DreamWorks, balked and this morning announced it had halted talks with DreamWorks. "Over the past several weeks DreamWorks has demanded material changes to previously agreed-upon terms. It is clear DreamWorks' needs and Universal's business interests are no longer in alignment," Universal said.

Disney, which had been one of several DreamWorks distribution suitors, is in talks with the Spielberg camp and apparently willing to step in and make the investment needed by the filmmaker. Disney has always been Plan B, although Spielberg's first choice was Universal, where he began his career. Spielberg's creative partner Stacey Snider, who runs DreamWorks, used to be chairwoman of Universal Pictures.

This is the second time that Universal let DreamWorks slip away over money issues. Before being sold to Paramount in 2006 for $1.6 billion, DreamWorks had been in serious negotiations with Universal. But at the eleventh hour, Universal lowered its acquisition offer and the deal fell apart.

-- Claudia Eller

UPDATED at 4:59 p.m.:  With a judge having denied a temporary restraining order sought by Screen Actors Guild President Alan Rosenberg, the major studios are expected  to resume contract negotiations with the union. Talks have been tentatively scheduled for Feb. 17 and 18, sources familiar with the talks say.

A judge rebuffed for the second time a bid by Screen Actors Guild President Alan Rosenberg to block the union's new negotiating team from reviving contract talks with the major studios.

Rosenberg and three other board members filed a lawsuit this week seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee. They maintained the vote, taken by means of a "written assent," violated the state's business laws and the union's own bylaws.

But Los Angeles Superior Court Judge James Chalfant denied the request for a temporary restraining order, ruling that the board's action complied with the state law governing corporations. He also rejected arguments by Rosenberg's attorneys that a two-third vote was required to disband the committee.

The judge's decision removes what would have been an embarrassing setback for SAG. A restraining order could have unseated the union's newly appointed interim executive director and chief negotiator. They were tapped by the board after it fired former Executive Director Doug Allen, contending he mishandled negotiations.

Nonetheless, Thursday's ruling, which didn't dismiss the overall case, doesn't end the uncertainty over when contract negotiations with the studios will resume. Actors have been without a contract since June 30, 2008. SAG postponed planned negotiating sessions earlier this week because of the fight with its union president. 

And it's unlikely studios would agree to return to the bargaining table as long as there is a pending lawsuit challenging the legitimacy of negotiations.

Eric George, attorney for Rosenberg and the other directors, said he would file an appeal in the next few days with the California Court of Appeal.

Ned Vaughn, spokesman for the Unite for Strength group that represents so-called moderate board members, hailed the judge's ruling and called on Rosenberg to drop his complaint.

"It's outrageous that this lawsuit has further delayed negotiations,'' he said. "It's time for Alan Rosenberg to drop this and accept that SAG members voted for change. They want it now."

Rosenberg, who attended Thursday's hearing, declined to comment.

Thursday's ruling marked a second setback for Rosenberg, whose initial appeal for an injunction was denied after the judge cited several technical errors in the complaint.

“I’m pleased that we can put this matter behind us and dedicate our complete focus to the needs of Screen Actors Guild members. There’s a lot of work ahead of us,” said SAG interim National Executive Director David White.

-- Richard Verrier

Is French media giant Vivendi souring on its investment in NBC Universal -- perhaps un petit peu?

Mais non, says Vivendi Chief Executive Jean-Bernard Levy.

Nonetheless, Vivendi plans to write down the value of its 20% stake in NBC Universal next month when the French company reports its quarterly earnings. For now, Vivendi won't discuss the amount of the anticipated noncash charge, which is necessary to reflect the lower valuation of the U.S. company that boasts the NBC broadcast network, cable channels USA Network, Bravo and MSNBC, and Universal Studios. 

General Electric Co., whose stock has been pummeled in the market meltdown, owns the controlling 80% of NBC Universal. When GE and Vivendi combined their entertainment properties in 2004 to create NBC Universal, the enterprise was valued at more than $40 billion, making Vivendi's portion worth around $8 billion. (GE reiterated Tuesday that it had no plans to reduce the value of NBC that it carries on its battered books.) 

"It's a tough environment, but we are very pleased with NBC," Levy said during an interview in Santa Monica. "We are pleased with the profits that NBC has achieved; the overall performance of NBC U has been very good." 

Vivendi had an opportunity in December to divest its stake in NBC Universal  -- but it chose not to. The timing was not right because of the U.S. media company's depressed trading multiples, Levy said. Vivendi intends to hang on to its interest until the market bounces back.

How long will Vivendi be part of the peacock company? Levy would not tip his hand other than to say, "We are not long-term owners." He added that his company prefers to be in the "driver's seat" of its investments, and that is not the case with NBC.

Still, Levy is a big fan of the guy behind the wheel, NBC Universal CEO Jeff Zucker.

"I like him very much, he is an excellent manager and he certainly knows his business," Levy said of Zucker. The two CEOs spent time together last weekend in Tampa, where they attended the Super Bowl, which was televised by NBC and generated huge ratings.

Levy now is expecting Zucker to make similar gains in the financial field. "We are happy that we will share in the potential value creation that he and his team will implement," Levy said.

-- Meg James

Photo of Vivendi CEO Jean-Bernard Levy by Alex Pham/Los Angeles Times

A judge on Tuesday denied a temporary restraining order sought by SAG President Alan Rosenberg to block negotiations between the union and the major studios.

Rosenberg and three other board members are seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee, contending that the action violated the state's corporate code.

But Los Angeles Superior Court Judge James Chalfant denied the request for an injunction, citing several technical errors in the lawsuit, and ordered that the complaint be resubmitted. A hearing on the case will be held Thursday. The litigation has delayed contract negotiations that were set to resume this week.

"They are so desperate to hold on to their power that they are willing to burn down their own house,'' said New York SAG President Sam Freed, one of the board members being sued. Rosenberg declined to comment.

-- Richard Verrier

Financial news network Bloomberg Television today pulled the plug on its "Night Talk" program and bid goodbye to longtime anchor Mike Schneider.

Schneider's last program was Monday night.

Additional staff cuts and TV programming lineup changes are expected to be announced Wednesday. The moves are part of broad restructuring of the multimedia group, which includes Bloomberg Television and Bloomberg Radio, a person familiar with the situation said.

The private company, founded by New York Mayor Michael Bloomberg, generates about $6 billion a year in revenue.

But the shuffle has already begun. Bloomberg Television Managing Editor John Meehan left the company last week. His departure comes four months after former NBC, CBS and Sony BMG Music executive Andy Lack was hired to manage Bloomberg's television and radio operations. Lack brought in David Rhodes from the Fox News Channel to run the television operations.

Bloomberg operates 24 hours a day and has TV channels in 11 countries, but its sprawling operations are seen as disjointed and not making full use of its team of reporters in 143 bureaus around the world.

Although the company plans to eliminate programs and trim employees, it plans to hire additional staff this year to improve its programming to better position the company for growth, said the person familiar with the situation.

"While other news organizations are shrinking, we continue to expand, improving our existing products while investing in new ones," Bloomberg Chairman Peter Grauer said in a statement in October when Lack was hired.

-- Meg James

Summit Entertainment and Lionsgate aren't getting hitched. At least not yet, if ever.

The idea has been broached, according to insiders, but nothing is cooking. Such a corporate marriage, were it to happen, would unite a suddenly hot movie production company with Hollywood's leading independent movie and TV studio, which is behind the "Saw" and "Tyler Perry" franchises.

So far, however, Summit has played hard to get.

A few weeks before the late November release of Summit's box office smash "Twilight," the company headed by Patrick Wachsberger and Rob Friedman, was approached by Lionsgate about a potential merger. Lionsgate, well aware of the teen vampire film's hot pre-release buzz, made an offer for Summit but was rebuffed because the price was too low.

Lionsgate and Summit, which are located right around the corner from each other in Santa Monica, say privately that there have been no formal talks since last fall. That's not to say that Lionsgate Chief Executive Jon Feltheimer and Summit's Friedman, who are golfing buddies, would never discuss it between rounds. Who knows?

After all, "Twilight," which was made for $37 million and grossed $341 million worldwide, is a highly prized new movie franchise, one that would fit nicely with Lionsgate's strategy of producing moderately budgeted movies targeted at a specific audience. The sequel, "New Moon," based on the second novel of author Stephenie Meyer's popular four-book series, is due in theaters Nov. 25 of this year. The first film's director, Catherine Hardwicke, dropped out for the next installment and was replaced by Chris Weitz, whose previous credits include "The Golden Compass" and "About a Boy."

"Twilight" put the nearly 2-year-old Summit on the Hollywood map. The start-up's first five releases included such box office flops as "Penelope," "Fly Me to the Moon" and "Sex Drive." Next up for the production and international sales company is "Push," a supernatural thriller with Dakota Fanning that opens Friday, and "Knowing," a mystery thriller starring Nicolas Cage, on March 20.

--Claudia Eller

Photos: Rob Friedman, left (Kevin Winter/Getty Images) and Jon Feltheimer (Vince Bucci/Getty Images)

To virtually no one's surprise, the Screen Actors Guild and the major studios announced late Wednesday that they will return to the negotiating table Tuesday to try to forge a new contract for actors.

The move comes only two days after SAG's board hired a new negotiator, John McGuire, and a new interim executive director, David White, following the ouster of Doug Allen. At the same time, the board formed a new "task force" to replace the previous negotating committee.

Moderates who orchestrated the shake-up are expected to move quickly to finalize a new contract, which will be modeled on deals secured over the past year by three other talent unions. Their challenge will be to obtain improvements over the studios' previous "final offer" that will be acceptable to members and demonstrate that the leadership didn't capitulate under pressure.

SAG members have been working without a contract since June 30.

-- Richard Verrier

Twentieth Century Fox has agreed to co-finance the third movie in the “Chronicles of Narnia” series, pending approval of the final script and shooting budget. If all goes as planned, Fox and Walden Media, which controls the movie rights to C.S. Lewis’ classic children's books, hope to begin production on "The Voyage of the Dawn Treader" by late summer so it will be ready for holiday 2010 release.

First, however, Fox and Walden have to hire a screenwriter to do another pass on the script that was last rewritten by Richard LaGravenese, whose credits include "Freedom Writers" and "The Horse Whisperer." The movie companies are looking to make the film for about $140 million. Michael Apted, who made "Amazing Grace" and the 1999 Bond flick "The World Is Not Enough," is on board to direct.

Fox is taking a financial gamble that Disney was unwilling to wage despite helping bankroll the first two films in the "Narnia" family franchise. Walden, owned by entrepreneur Phil Anschutz, was forced to seek a new financial partner on “Dawn Treader” after Disney balked at the cost and opted out.

Fox was the most likely partner because the studio already markets and distributes Walden movies under its Fox Walden label.

Over the last few weeks, Walden chief David Weil and “Narnia” producer Mark Johnson have held a series of meetings with top Fox executives, including movie chiefs Tom Rothman and Jim Gianopulos, to discuss script revisions and the movie's cost.

While the targeted budget of “Dawn Treader” is much lower than that of the last Narnia movie, “Prince Caspian,” which cost $225 million to produce, it's still a big gamble. Released by Disney last year, the sequel was much less popular than the first "Narnia" movie, “The Lion, the Witch and the Wardrobe.” The sequel grossed $419 million worldwide compared with its 2005 predecessor, which generated $745 million in ticket sales.

Disney and Walden hope that DVD sales of "Prince Caspian" will help pull the movie out of the red.

-- Claudia Eller

Photo: "The Chronicles of Narnia: Prince Caspian" is courtesy of Walt Disney Studios

Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.

The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies. 

A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.

A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Katzenberg says decision to close nursing home clouded by bad PR

DreamWorks Animation Chief Executive Jeffrey Katzenberg made a mea culpa on Wednesday, saying that the Motion Picture & Television Fund had done a poor job of communicating the reasons for its decision to close the hospital and nursing home.

"We give ourselves a failing grade,"  said Katzenberg, who chairs the charity's fundraising board. "This has not been communicated well."

But Katzenberg and other board members stood by their decision, describing it as a necessary move to preserve the viability of the organization and its various other programs, which includes six healthcare centers, child care services and a retirement community in Woodland Hills with 215 residents.

"We have made a decision that allows this incredibly important enterprise to live on and have a great future," he said during a conference call with reporters, aimed at quelling fury among the residents' family members who are angry over the facility's closure.

David Tillman, the fund's CEO, said there was a $20-million gap between program revenues and the cost of services that was projected to widen because of rising medical costs and declining reimbursements from the government. In the past, he said, the fund could rely on investment income and philanthropy to make up the shortfall, but that option is no longer possible because of the deep recession.

Frank Mancuso, chairman of the fund's corporate board, said that the board had already taken various steps to stem losses, including closing the hospital's costly intensive care unit, but had run out of options. "We left no stone unturned," he said.

-- Richard Verrier

While several of Hollywood's financially strained independent production companies have either gone under or drastically scaled back operations over the past year, Fred Smith -- the founder and chief executive of FedEx Corp. -- says he's still committed to his side business: investing in movies.

For more than a decade, the Hollywood outsider who lives in Memphis, Tenn., has quietly bankrolled Alcon Entertainment, the boutique production outfit behind such films as "My Dog Skip" and "The Sisterhood of the Traveling Pants" series. His company may not be known for any blockbuster success and has had some box-office losers like the romantic comedy "Chasing Liberty" and its debut movie, "Lost & Found." But Smith claims that, thanks to solid performers such as the romantic drama "P.S. I Love You," starring Hilary Swank and Gerald Butler, and continued financial discipline, Alcon has been a profitable venture.

He attributes the company's stamina in what he readily acknowledges is "a very tough business" to the cost-conscious "no-limos" philosophy guiding Alcon's two chief executives, Andrew Kosove and Broderick Johnson. Despite being a Yalie, Smith hired the two Princeton alums after meeting them in 1994 and being impressed with their 220-page business plan for launching a movie company.

Smith said the duo's success lies in the fact that the pair has stuck to their original strategy for lowering risks inherent to the unpredictable movie business: Keep film budgets tight and overhead low; focus on specific genres like family films; and have a strong studio partner to help market and distribute the pictures (Alcon has a multi-year distribution deal with Warner Bros. and typically sells off the international rights in its films to help finance them).

"Those three things have proven that we're the exception to the rule," Smith said when he dropped by The Times to talk about the toll that the bad economy is taking on his main business --delivering packages.

Smith ducked a question about how much of his own money he's invested in the movie business. "It's mostly been done with borrowed money," he says, noting Alcon's good fortune last year in securing a $500-million bank loan before those kind of "slate-financing" deals dried up. Smith says he used his own FedEx stock to secure the loan.

The entrepreneur, who leaves the day-to-day running of Alcon to his two movie chiefs, says he reads the occasional script and rarely visits the set of his company's movies.

His personal Alcon favorite? Smith says its Jay Russell's family movie, "My Dog Skip," based on Willie Morris' World War II memoir about a boy and his dog growing up in a small Southern town. Made for $7 million, the 2000 release grossed $35 million at the worldwide box office and did well on video. Smith said he defies anyone to watch the movie "without a tear in their eye."

Smith insists he doesn't regret his own failings as a would-be movie star. He jokes that any ambitions he may have harbored were "left on the cutting-room floor" when his three-minute cameo in Fox's 2000 "Cast Away," starring Tom Hanks as a FedEx executive in a modern-day version of Robinson Crusoe, was "so bad, so atrocious, it was cut to 18 seconds."

--Claudia Eller

Steven Spielberg's DreamWorks finalized a distribution deal with Disney today, giving the filmmaker key financial demands he failed to extract from his longtime studio alley Universal Pictures: a commitment to risk hundreds of millions in film prints and advertising costs and to share its valuable pay TV slots.

As part of the deal, Disney will also give DreamWorks -- which has been struggling to raise money for its new studio -- a cash advance of about $100 million and a potential $75-million credit line which Spielberg & Co. can draw on for future productions. Disney's total outlay of $175 million is taking the form of a loan and is not an equity investment.

But, here's the catch. While DreamWorks desperately needs the cash advance to get its slate of movies rolling, it can't access Disney's money until it raises the first phase of its debt financing -- $325 million -- which will trigger a matching equity investment by Spielberg's new studio partner India's Reliance Entertainment.

"Disney has given us all the support we need to be in a position to raise our money and launch our company," said Stacey Snider, partner and chief executive of DreamWorks.

DreamWorks initially hoped to close its bank financing by the the end of the first quarter, but that now appears to be unlikely. A person close to the matter said that a more realistic time frame is late April.

Spielberg and Reliance will continue to fund overhead at DreamWorks, which employs about 60 people, until the deal is completed.

Disney's distribution agreement calls for DreamWorks to deliver up to 30 movies over the term of the deal. DreamWorks hopes to make up to six films a year for Disney's Touchstone Films banner. The first release -- yet to be identified -- will be in 2010.

Disney will market and release the movies worldwide everywhere except India, where Mumbai-based Reliance retains the distribution rights.

The Burbank studio will advance all the prints and advertising costs in exchange for collecting a distribution fee of what could amount to as much as 10%.

DreamWorks will also be able to piggyback on Disney's pay cable deal with Starz Entertainment, which provides movie producers with a significant revenue stream worth hundreds of millions of dollars. Last year, DreamWorks had failed at an attempt to secure its own pay-TV deal with HBO.

Spielberg hooked up with Reliance last year in a 50-50 venture to relaunch DreamWorks as a new studio with hoped-for funding of $1.25 billion. Reliance agreed to match in equity what DreamWorks raises in debt, but those efforts have been greatly hampered by the global credit crisis.

Surprising news of a pending deal between DreamWorks and Disney came late last week after a previously announced agreement between the Spielberg studio and Universal Pictures fell apart. Last fall, Universal had beat Disney and other potential distributors to the punch by cinching the right to distribute DreamWorks new movies. But, as DreamWorks' attempts to raise all of its funding by early this year became derailed by the financial markets, Spielberg and Reliance put pressure on Universal to change the original terms of its distribution deal.

Among sticking points between Universal and DreamWorks was that Universal refused to put up hundreds of millions in funds for prints and ads of DreamWorks movies -- an extremely risky investment in the volatile film business. DreamWorks also wanted more movie slots from Universal's deal with HBO than the studio was able to provide.

-- Claudia Eller

Left photo: Steven Spielberg. Credit: Hector Mata / AFP

Right photo: Stacey Snider. Credit: Vince Bucci / Getty Images

Think of it as a repeat of the swearing-in of President Obama in "an excess of prudence."

The Screen Actors Guild board voted for a second time to oust former executive director Doug Allen and replace the union's negotiating committee with a newly appointed task force dominated by moderates.

The move was widely anticipated, given that the board had previously taken such a vote last month by means of a "written assent."

That action, however, was challenged in a lawsuit filed last week by SAG President Alan Rosenberg and three other directors. Rosenberg has been a staunch ally of Allen and had refused to accept the board's appointment of David White as interim executive director and John McGuire as SAG's new chief negotiator. Last week, a judge denied a request for a temporary restraining order, saying the board had acted within its rights.

Sunday's vote -- supported by 59% of the 71-member board -- delivers a further blow to Rosenberg's legal challenge, which had threatened to delay a resumption in long-stalled contract negotiations with the studios. Talks are expected to resume on Feb. 17.

-- Richard Verrier

DreamWorks' planned distribution deal with Universal Pictures has collapsed as the parties are unable to agree upon final terms.

The failure of the agreement paves the way for Walt Disney Studios, which had earlier sought a distribution deal with DreamWorks, to step in as Steven Spielberg's new studio home, according to people familiar with the situation.

DreamWorks has been struggling for months to raise funds for its new studio, but efforts to raise the debt portion of its desired $1.25 billion in financing has been hampered by the global credit crisis.

DreamWorks, which split from former owner Paramount Pictures last year, is in need of some serious cash to continue financing overhead and jump-start plans to make about six movies a year. Spielberg's businesss partner, India's Reliance Entertainment, will not put up the equity portion of the financing until DreamWorks secures a matching sum in debt. DreamWorks' lead bank, JPMorgan Chase, so far has received a commitment for less than half of the $325-million loan that Spielberg hopes to have by late March. At that point, Reliance would match the bank contribution. DreamWorks is seeking to raise a total of about $1.25 billion in equity and debt.

Reliance had been pressuring Universal to advance DreamWorks at least $150 million in interim financing. But Universal, which in October announced a multi-year distribution deal with DreamWorks, balked and this morning announced it had halted talks with DreamWorks. "Over the past several weeks DreamWorks has demanded material changes to previously agreed-upon terms. It is clear DreamWorks' needs and Universal's business interests are no longer in alignment," Universal said.

Disney, which had been one of several DreamWorks distribution suitors, is in talks with the Spielberg camp and apparently willing to step in and make the investment needed by the filmmaker. Disney has always been Plan B, although Spielberg's first choice was Universal, where he began his career. Spielberg's creative partner Stacey Snider, who runs DreamWorks, used to be chairwoman of Universal Pictures.

This is the second time that Universal let DreamWorks slip away over money issues. Before being sold to Paramount in 2006 for $1.6 billion, DreamWorks had been in serious negotiations with Universal. But at the eleventh hour, Universal lowered its acquisition offer and the deal fell apart.

-- Claudia Eller

UPDATED at 4:59 p.m.:  With a judge having denied a temporary restraining order sought by Screen Actors Guild President Alan Rosenberg, the major studios are expected  to resume contract negotiations with the union. Talks have been tentatively scheduled for Feb. 17 and 18, sources familiar with the talks say.

A judge rebuffed for the second time a bid by Screen Actors Guild President Alan Rosenberg to block the union's new negotiating team from reviving contract talks with the major studios.

Rosenberg and three other board members filed a lawsuit this week seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee. They maintained the vote, taken by means of a "written assent," violated the state's business laws and the union's own bylaws.

But Los Angeles Superior Court Judge James Chalfant denied the request for a temporary restraining order, ruling that the board's action complied with the state law governing corporations. He also rejected arguments by Rosenberg's attorneys that a two-third vote was required to disband the committee.

The judge's decision removes what would have been an embarrassing setback for SAG. A restraining order could have unseated the union's newly appointed interim executive director and chief negotiator. They were tapped by the board after it fired former Executive Director Doug Allen, contending he mishandled negotiations.

Nonetheless, Thursday's ruling, which didn't dismiss the overall case, doesn't end the uncertainty over when contract negotiations with the studios will resume. Actors have been without a contract since June 30, 2008. SAG postponed planned negotiating sessions earlier this week because of the fight with its union president. 

And it's unlikely studios would agree to return to the bargaining table as long as there is a pending lawsuit challenging the legitimacy of negotiations.

Eric George, attorney for Rosenberg and the other directors, said he would file an appeal in the next few days with the California Court of Appeal.

Ned Vaughn, spokesman for the Unite for Strength group that represents so-called moderate board members, hailed the judge's ruling and called on Rosenberg to drop his complaint.

"It's outrageous that this lawsuit has further delayed negotiations,'' he said. "It's time for Alan Rosenberg to drop this and accept that SAG members voted for change. They want it now."

Rosenberg, who attended Thursday's hearing, declined to comment.

Thursday's ruling marked a second setback for Rosenberg, whose initial appeal for an injunction was denied after the judge cited several technical errors in the complaint.

“I’m pleased that we can put this matter behind us and dedicate our complete focus to the needs of Screen Actors Guild members. There’s a lot of work ahead of us,” said SAG interim National Executive Director David White.

-- Richard Verrier

Is French media giant Vivendi souring on its investment in NBC Universal -- perhaps un petit peu?

Mais non, says Vivendi Chief Executive Jean-Bernard Levy.

Nonetheless, Vivendi plans to write down the value of its 20% stake in NBC Universal next month when the French company reports its quarterly earnings. For now, Vivendi won't discuss the amount of the anticipated noncash charge, which is necessary to reflect the lower valuation of the U.S. company that boasts the NBC broadcast network, cable channels USA Network, Bravo and MSNBC, and Universal Studios. 

General Electric Co., whose stock has been pummeled in the market meltdown, owns the controlling 80% of NBC Universal. When GE and Vivendi combined their entertainment properties in 2004 to create NBC Universal, the enterprise was valued at more than $40 billion, making Vivendi's portion worth around $8 billion. (GE reiterated Tuesday that it had no plans to reduce the value of NBC that it carries on its battered books.) 

"It's a tough environment, but we are very pleased with NBC," Levy said during an interview in Santa Monica. "We are pleased with the profits that NBC has achieved; the overall performance of NBC U has been very good." 

Vivendi had an opportunity in December to divest its stake in NBC Universal  -- but it chose not to. The timing was not right because of the U.S. media company's depressed trading multiples, Levy said. Vivendi intends to hang on to its interest until the market bounces back.

How long will Vivendi be part of the peacock company? Levy would not tip his hand other than to say, "We are not long-term owners." He added that his company prefers to be in the "driver's seat" of its investments, and that is not the case with NBC.

Still, Levy is a big fan of the guy behind the wheel, NBC Universal CEO Jeff Zucker.

"I like him very much, he is an excellent manager and he certainly knows his business," Levy said of Zucker. The two CEOs spent time together last weekend in Tampa, where they attended the Super Bowl, which was televised by NBC and generated huge ratings.

Levy now is expecting Zucker to make similar gains in the financial field. "We are happy that we will share in the potential value creation that he and his team will implement," Levy said.

-- Meg James

Photo of Vivendi CEO Jean-Bernard Levy by Alex Pham/Los Angeles Times

A judge on Tuesday denied a temporary restraining order sought by SAG President Alan Rosenberg to block negotiations between the union and the major studios.

Rosenberg and three other board members are seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee, contending that the action violated the state's corporate code.

But Los Angeles Superior Court Judge James Chalfant denied the request for an injunction, citing several technical errors in the lawsuit, and ordered that the complaint be resubmitted. A hearing on the case will be held Thursday. The litigation has delayed contract negotiations that were set to resume this week.

"They are so desperate to hold on to their power that they are willing to burn down their own house,'' said New York SAG President Sam Freed, one of the board members being sued. Rosenberg declined to comment.

-- Richard Verrier

Financial news network Bloomberg Television today pulled the plug on its "Night Talk" program and bid goodbye to longtime anchor Mike Schneider.

Schneider's last program was Monday night.

Additional staff cuts and TV programming lineup changes are expected to be announced Wednesday. The moves are part of broad restructuring of the multimedia group, which includes Bloomberg Television and Bloomberg Radio, a person familiar with the situation said.

The private company, founded by New York Mayor Michael Bloomberg, generates about $6 billion a year in revenue.

But the shuffle has already begun. Bloomberg Television Managing Editor John Meehan left the company last week. His departure comes four months after former NBC, CBS and Sony BMG Music executive Andy Lack was hired to manage Bloomberg's television and radio operations. Lack brought in David Rhodes from the Fox News Channel to run the television operations.

Bloomberg operates 24 hours a day and has TV channels in 11 countries, but its sprawling operations are seen as disjointed and not making full use of its team of reporters in 143 bureaus around the world.

Although the company plans to eliminate programs and trim employees, it plans to hire additional staff this year to improve its programming to better position the company for growth, said the person familiar with the situation.

"While other news organizations are shrinking, we continue to expand, improving our existing products while investing in new ones," Bloomberg Chairman Peter Grauer said in a statement in October when Lack was hired.

-- Meg James

Summit Entertainment and Lionsgate aren't getting hitched. At least not yet, if ever.

The idea has been broached, according to insiders, but nothing is cooking. Such a corporate marriage, were it to happen, would unite a suddenly hot movie production company with Hollywood's leading independent movie and TV studio, which is behind the "Saw" and "Tyler Perry" franchises.

So far, however, Summit has played hard to get.

A few weeks before the late November release of Summit's box office smash "Twilight," the company headed by Patrick Wachsberger and Rob Friedman, was approached by Lionsgate about a potential merger. Lionsgate, well aware of the teen vampire film's hot pre-release buzz, made an offer for Summit but was rebuffed because the price was too low.

Lionsgate and Summit, which are located right around the corner from each other in Santa Monica, say privately that there have been no formal talks since last fall. That's not to say that Lionsgate Chief Executive Jon Feltheimer and Summit's Friedman, who are golfing buddies, would never discuss it between rounds. Who knows?

After all, "Twilight," which was made for $37 million and grossed $341 million worldwide, is a highly prized new movie franchise, one that would fit nicely with Lionsgate's strategy of producing moderately budgeted movies targeted at a specific audience. The sequel, "New Moon," based on the second novel of author Stephenie Meyer's popular four-book series, is due in theaters Nov. 25 of this year. The first film's director, Catherine Hardwicke, dropped out for the next installment and was replaced by Chris Weitz, whose previous credits include "The Golden Compass" and "About a Boy."

"Twilight" put the nearly 2-year-old Summit on the Hollywood map. The start-up's first five releases included such box office flops as "Penelope," "Fly Me to the Moon" and "Sex Drive." Next up for the production and international sales company is "Push," a supernatural thriller with Dakota Fanning that opens Friday, and "Knowing," a mystery thriller starring Nicolas Cage, on March 20.

--Claudia Eller

Photos: Rob Friedman, left (Kevin Winter/Getty Images) and Jon Feltheimer (Vince Bucci/Getty Images)

To virtually no one's surprise, the Screen Actors Guild and the major studios announced late Wednesday that they will return to the negotiating table Tuesday to try to forge a new contract for actors.

The move comes only two days after SAG's board hired a new negotiator, John McGuire, and a new interim executive director, David White, following the ouster of Doug Allen. At the same time, the board formed a new "task force" to replace the previous negotating committee.

Moderates who orchestrated the shake-up are expected to move quickly to finalize a new contract, which will be modeled on deals secured over the past year by three other talent unions. Their challenge will be to obtain improvements over the studios' previous "final offer" that will be acceptable to members and demonstrate that the leadership didn't capitulate under pressure.

SAG members have been working without a contract since June 30.

-- Richard Verrier

Twentieth Century Fox has agreed to co-finance the third movie in the “Chronicles of Narnia” series, pending approval of the final script and shooting budget. If all goes as planned, Fox and Walden Media, which controls the movie rights to C.S. Lewis’ classic children's books, hope to begin production on "The Voyage of the Dawn Treader" by late summer so it will be ready for holiday 2010 release.

First, however, Fox and Walden have to hire a screenwriter to do another pass on the script that was last rewritten by Richard LaGravenese, whose credits include "Freedom Writers" and "The Horse Whisperer." The movie companies are looking to make the film for about $140 million. Michael Apted, who made "Amazing Grace" and the 1999 Bond flick "The World Is Not Enough," is on board to direct.

Fox is taking a financial gamble that Disney was unwilling to wage despite helping bankroll the first two films in the "Narnia" family franchise. Walden, owned by entrepreneur Phil Anschutz, was forced to seek a new financial partner on “Dawn Treader” after Disney balked at the cost and opted out.

Fox was the most likely partner because the studio already markets and distributes Walden movies under its Fox Walden label.

Over the last few weeks, Walden chief David Weil and “Narnia” producer Mark Johnson have held a series of meetings with top Fox executives, including movie chiefs Tom Rothman and Jim Gianopulos, to discuss script revisions and the movie's cost.

While the targeted budget of “Dawn Treader” is much lower than that of the last Narnia movie, “Prince Caspian,” which cost $225 million to produce, it's still a big gamble. Released by Disney last year, the sequel was much less popular than the first "Narnia" movie, “The Lion, the Witch and the Wardrobe.” The sequel grossed $419 million worldwide compared with its 2005 predecessor, which generated $745 million in ticket sales.

Disney and Walden hope that DVD sales of "Prince Caspian" will help pull the movie out of the red.

-- Claudia Eller

Photo: "The Chronicles of Narnia: Prince Caspian" is courtesy of Walt Disney Studios

Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.

The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies. 

A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.

A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

FedEx chief Fred Smith still believes in the movie business--Is he nuts?

While several of Hollywood's financially strained independent production companies have either gone under or drastically scaled back operations over the past year, Fred Smith -- the founder and chief executive of FedEx Corp. -- says he's still committed to his side business: investing in movies.

For more than a decade, the Hollywood outsider who lives in Memphis, Tenn., has quietly bankrolled Alcon Entertainment, the boutique production outfit behind such films as "My Dog Skip" and "The Sisterhood of the Traveling Pants" series. His company may not be known for any blockbuster success and has had some box-office losers like the romantic comedy "Chasing Liberty" and its debut movie, "Lost & Found." But Smith claims that, thanks to solid performers such as the romantic drama "P.S. I Love You," starring Hilary Swank and Gerald Butler, and continued financial discipline, Alcon has been a profitable venture.

He attributes the company's stamina in what he readily acknowledges is "a very tough business" to the cost-conscious "no-limos" philosophy guiding Alcon's two chief executives, Andrew Kosove and Broderick Johnson. Despite being a Yalie, Smith hired the two Princeton alums after meeting them in 1994 and being impressed with their 220-page business plan for launching a movie company.

Smith said the duo's success lies in the fact that the pair has stuck to their original strategy for lowering risks inherent to the unpredictable movie business: Keep film budgets tight and overhead low; focus on specific genres like family films; and have a strong studio partner to help market and distribute the pictures (Alcon has a multi-year distribution deal with Warner Bros. and typically sells off the international rights in its films to help finance them).

"Those three things have proven that we're the exception to the rule," Smith said when he dropped by The Times to talk about the toll that the bad economy is taking on his main business --delivering packages.

Smith ducked a question about how much of his own money he's invested in the movie business. "It's mostly been done with borrowed money," he says, noting Alcon's good fortune last year in securing a $500-million bank loan before those kind of "slate-financing" deals dried up. Smith says he used his own FedEx stock to secure the loan.

The entrepreneur, who leaves the day-to-day running of Alcon to his two movie chiefs, says he reads the occasional script and rarely visits the set of his company's movies.

His personal Alcon favorite? Smith says its Jay Russell's family movie, "My Dog Skip," based on Willie Morris' World War II memoir about a boy and his dog growing up in a small Southern town. Made for $7 million, the 2000 release grossed $35 million at the worldwide box office and did well on video. Smith said he defies anyone to watch the movie "without a tear in their eye."

Smith insists he doesn't regret his own failings as a would-be movie star. He jokes that any ambitions he may have harbored were "left on the cutting-room floor" when his three-minute cameo in Fox's 2000 "Cast Away," starring Tom Hanks as a FedEx executive in a modern-day version of Robinson Crusoe, was "so bad, so atrocious, it was cut to 18 seconds."

--Claudia Eller

Steven Spielberg's DreamWorks finalized a distribution deal with Disney today, giving the filmmaker key financial demands he failed to extract from his longtime studio alley Universal Pictures: a commitment to risk hundreds of millions in film prints and advertising costs and to share its valuable pay TV slots.

As part of the deal, Disney will also give DreamWorks -- which has been struggling to raise money for its new studio -- a cash advance of about $100 million and a potential $75-million credit line which Spielberg & Co. can draw on for future productions. Disney's total outlay of $175 million is taking the form of a loan and is not an equity investment.

But, here's the catch. While DreamWorks desperately needs the cash advance to get its slate of movies rolling, it can't access Disney's money until it raises the first phase of its debt financing -- $325 million -- which will trigger a matching equity investment by Spielberg's new studio partner India's Reliance Entertainment.

"Disney has given us all the support we need to be in a position to raise our money and launch our company," said Stacey Snider, partner and chief executive of DreamWorks.

DreamWorks initially hoped to close its bank financing by the the end of the first quarter, but that now appears to be unlikely. A person close to the matter said that a more realistic time frame is late April.

Spielberg and Reliance will continue to fund overhead at DreamWorks, which employs about 60 people, until the deal is completed.

Disney's distribution agreement calls for DreamWorks to deliver up to 30 movies over the term of the deal. DreamWorks hopes to make up to six films a year for Disney's Touchstone Films banner. The first release -- yet to be identified -- will be in 2010.

Disney will market and release the movies worldwide everywhere except India, where Mumbai-based Reliance retains the distribution rights.

The Burbank studio will advance all the prints and advertising costs in exchange for collecting a distribution fee of what could amount to as much as 10%.

DreamWorks will also be able to piggyback on Disney's pay cable deal with Starz Entertainment, which provides movie producers with a significant revenue stream worth hundreds of millions of dollars. Last year, DreamWorks had failed at an attempt to secure its own pay-TV deal with HBO.

Spielberg hooked up with Reliance last year in a 50-50 venture to relaunch DreamWorks as a new studio with hoped-for funding of $1.25 billion. Reliance agreed to match in equity what DreamWorks raises in debt, but those efforts have been greatly hampered by the global credit crisis.

Surprising news of a pending deal between DreamWorks and Disney came late last week after a previously announced agreement between the Spielberg studio and Universal Pictures fell apart. Last fall, Universal had beat Disney and other potential distributors to the punch by cinching the right to distribute DreamWorks new movies. But, as DreamWorks' attempts to raise all of its funding by early this year became derailed by the financial markets, Spielberg and Reliance put pressure on Universal to change the original terms of its distribution deal.

Among sticking points between Universal and DreamWorks was that Universal refused to put up hundreds of millions in funds for prints and ads of DreamWorks movies -- an extremely risky investment in the volatile film business. DreamWorks also wanted more movie slots from Universal's deal with HBO than the studio was able to provide.

-- Claudia Eller

Left photo: Steven Spielberg. Credit: Hector Mata / AFP

Right photo: Stacey Snider. Credit: Vince Bucci / Getty Images

Think of it as a repeat of the swearing-in of President Obama in "an excess of prudence."

The Screen Actors Guild board voted for a second time to oust former executive director Doug Allen and replace the union's negotiating committee with a newly appointed task force dominated by moderates.

The move was widely anticipated, given that the board had previously taken such a vote last month by means of a "written assent."

That action, however, was challenged in a lawsuit filed last week by SAG President Alan Rosenberg and three other directors. Rosenberg has been a staunch ally of Allen and had refused to accept the board's appointment of David White as interim executive director and John McGuire as SAG's new chief negotiator. Last week, a judge denied a request for a temporary restraining order, saying the board had acted within its rights.

Sunday's vote -- supported by 59% of the 71-member board -- delivers a further blow to Rosenberg's legal challenge, which had threatened to delay a resumption in long-stalled contract negotiations with the studios. Talks are expected to resume on Feb. 17.

-- Richard Verrier

DreamWorks' planned distribution deal with Universal Pictures has collapsed as the parties are unable to agree upon final terms.

The failure of the agreement paves the way for Walt Disney Studios, which had earlier sought a distribution deal with DreamWorks, to step in as Steven Spielberg's new studio home, according to people familiar with the situation.

DreamWorks has been struggling for months to raise funds for its new studio, but efforts to raise the debt portion of its desired $1.25 billion in financing has been hampered by the global credit crisis.

DreamWorks, which split from former owner Paramount Pictures last year, is in need of some serious cash to continue financing overhead and jump-start plans to make about six movies a year. Spielberg's businesss partner, India's Reliance Entertainment, will not put up the equity portion of the financing until DreamWorks secures a matching sum in debt. DreamWorks' lead bank, JPMorgan Chase, so far has received a commitment for less than half of the $325-million loan that Spielberg hopes to have by late March. At that point, Reliance would match the bank contribution. DreamWorks is seeking to raise a total of about $1.25 billion in equity and debt.

Reliance had been pressuring Universal to advance DreamWorks at least $150 million in interim financing. But Universal, which in October announced a multi-year distribution deal with DreamWorks, balked and this morning announced it had halted talks with DreamWorks. "Over the past several weeks DreamWorks has demanded material changes to previously agreed-upon terms. It is clear DreamWorks' needs and Universal's business interests are no longer in alignment," Universal said.

Disney, which had been one of several DreamWorks distribution suitors, is in talks with the Spielberg camp and apparently willing to step in and make the investment needed by the filmmaker. Disney has always been Plan B, although Spielberg's first choice was Universal, where he began his career. Spielberg's creative partner Stacey Snider, who runs DreamWorks, used to be chairwoman of Universal Pictures.

This is the second time that Universal let DreamWorks slip away over money issues. Before being sold to Paramount in 2006 for $1.6 billion, DreamWorks had been in serious negotiations with Universal. But at the eleventh hour, Universal lowered its acquisition offer and the deal fell apart.

-- Claudia Eller

UPDATED at 4:59 p.m.:  With a judge having denied a temporary restraining order sought by Screen Actors Guild President Alan Rosenberg, the major studios are expected  to resume contract negotiations with the union. Talks have been tentatively scheduled for Feb. 17 and 18, sources familiar with the talks say.

A judge rebuffed for the second time a bid by Screen Actors Guild President Alan Rosenberg to block the union's new negotiating team from reviving contract talks with the major studios.

Rosenberg and three other board members filed a lawsuit this week seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee. They maintained the vote, taken by means of a "written assent," violated the state's business laws and the union's own bylaws.

But Los Angeles Superior Court Judge James Chalfant denied the request for a temporary restraining order, ruling that the board's action complied with the state law governing corporations. He also rejected arguments by Rosenberg's attorneys that a two-third vote was required to disband the committee.

The judge's decision removes what would have been an embarrassing setback for SAG. A restraining order could have unseated the union's newly appointed interim executive director and chief negotiator. They were tapped by the board after it fired former Executive Director Doug Allen, contending he mishandled negotiations.

Nonetheless, Thursday's ruling, which didn't dismiss the overall case, doesn't end the uncertainty over when contract negotiations with the studios will resume. Actors have been without a contract since June 30, 2008. SAG postponed planned negotiating sessions earlier this week because of the fight with its union president. 

And it's unlikely studios would agree to return to the bargaining table as long as there is a pending lawsuit challenging the legitimacy of negotiations.

Eric George, attorney for Rosenberg and the other directors, said he would file an appeal in the next few days with the California Court of Appeal.

Ned Vaughn, spokesman for the Unite for Strength group that represents so-called moderate board members, hailed the judge's ruling and called on Rosenberg to drop his complaint.

"It's outrageous that this lawsuit has further delayed negotiations,'' he said. "It's time for Alan Rosenberg to drop this and accept that SAG members voted for change. They want it now."

Rosenberg, who attended Thursday's hearing, declined to comment.

Thursday's ruling marked a second setback for Rosenberg, whose initial appeal for an injunction was denied after the judge cited several technical errors in the complaint.

“I’m pleased that we can put this matter behind us and dedicate our complete focus to the needs of Screen Actors Guild members. There’s a lot of work ahead of us,” said SAG interim National Executive Director David White.

-- Richard Verrier

Is French media giant Vivendi souring on its investment in NBC Universal -- perhaps un petit peu?

Mais non, says Vivendi Chief Executive Jean-Bernard Levy.

Nonetheless, Vivendi plans to write down the value of its 20% stake in NBC Universal next month when the French company reports its quarterly earnings. For now, Vivendi won't discuss the amount of the anticipated noncash charge, which is necessary to reflect the lower valuation of the U.S. company that boasts the NBC broadcast network, cable channels USA Network, Bravo and MSNBC, and Universal Studios. 

General Electric Co., whose stock has been pummeled in the market meltdown, owns the controlling 80% of NBC Universal. When GE and Vivendi combined their entertainment properties in 2004 to create NBC Universal, the enterprise was valued at more than $40 billion, making Vivendi's portion worth around $8 billion. (GE reiterated Tuesday that it had no plans to reduce the value of NBC that it carries on its battered books.) 

"It's a tough environment, but we are very pleased with NBC," Levy said during an interview in Santa Monica. "We are pleased with the profits that NBC has achieved; the overall performance of NBC U has been very good." 

Vivendi had an opportunity in December to divest its stake in NBC Universal  -- but it chose not to. The timing was not right because of the U.S. media company's depressed trading multiples, Levy said. Vivendi intends to hang on to its interest until the market bounces back.

How long will Vivendi be part of the peacock company? Levy would not tip his hand other than to say, "We are not long-term owners." He added that his company prefers to be in the "driver's seat" of its investments, and that is not the case with NBC.

Still, Levy is a big fan of the guy behind the wheel, NBC Universal CEO Jeff Zucker.

"I like him very much, he is an excellent manager and he certainly knows his business," Levy said of Zucker. The two CEOs spent time together last weekend in Tampa, where they attended the Super Bowl, which was televised by NBC and generated huge ratings.

Levy now is expecting Zucker to make similar gains in the financial field. "We are happy that we will share in the potential value creation that he and his team will implement," Levy said.

-- Meg James

Photo of Vivendi CEO Jean-Bernard Levy by Alex Pham/Los Angeles Times

A judge on Tuesday denied a temporary restraining order sought by SAG President Alan Rosenberg to block negotiations between the union and the major studios.

Rosenberg and three other board members are seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee, contending that the action violated the state's corporate code.

But Los Angeles Superior Court Judge James Chalfant denied the request for an injunction, citing several technical errors in the lawsuit, and ordered that the complaint be resubmitted. A hearing on the case will be held Thursday. The litigation has delayed contract negotiations that were set to resume this week.

"They are so desperate to hold on to their power that they are willing to burn down their own house,'' said New York SAG President Sam Freed, one of the board members being sued. Rosenberg declined to comment.

-- Richard Verrier

Financial news network Bloomberg Television today pulled the plug on its "Night Talk" program and bid goodbye to longtime anchor Mike Schneider.

Schneider's last program was Monday night.

Additional staff cuts and TV programming lineup changes are expected to be announced Wednesday. The moves are part of broad restructuring of the multimedia group, which includes Bloomberg Television and Bloomberg Radio, a person familiar with the situation said.

The private company, founded by New York Mayor Michael Bloomberg, generates about $6 billion a year in revenue.

But the shuffle has already begun. Bloomberg Television Managing Editor John Meehan left the company last week. His departure comes four months after former NBC, CBS and Sony BMG Music executive Andy Lack was hired to manage Bloomberg's television and radio operations. Lack brought in David Rhodes from the Fox News Channel to run the television operations.

Bloomberg operates 24 hours a day and has TV channels in 11 countries, but its sprawling operations are seen as disjointed and not making full use of its team of reporters in 143 bureaus around the world.

Although the company plans to eliminate programs and trim employees, it plans to hire additional staff this year to improve its programming to better position the company for growth, said the person familiar with the situation.

"While other news organizations are shrinking, we continue to expand, improving our existing products while investing in new ones," Bloomberg Chairman Peter Grauer said in a statement in October when Lack was hired.

-- Meg James

Summit Entertainment and Lionsgate aren't getting hitched. At least not yet, if ever.

The idea has been broached, according to insiders, but nothing is cooking. Such a corporate marriage, were it to happen, would unite a suddenly hot movie production company with Hollywood's leading independent movie and TV studio, which is behind the "Saw" and "Tyler Perry" franchises.

So far, however, Summit has played hard to get.

A few weeks before the late November release of Summit's box office smash "Twilight," the company headed by Patrick Wachsberger and Rob Friedman, was approached by Lionsgate about a potential merger. Lionsgate, well aware of the teen vampire film's hot pre-release buzz, made an offer for Summit but was rebuffed because the price was too low.

Lionsgate and Summit, which are located right around the corner from each other in Santa Monica, say privately that there have been no formal talks since last fall. That's not to say that Lionsgate Chief Executive Jon Feltheimer and Summit's Friedman, who are golfing buddies, would never discuss it between rounds. Who knows?

After all, "Twilight," which was made for $37 million and grossed $341 million worldwide, is a highly prized new movie franchise, one that would fit nicely with Lionsgate's strategy of producing moderately budgeted movies targeted at a specific audience. The sequel, "New Moon," based on the second novel of author Stephenie Meyer's popular four-book series, is due in theaters Nov. 25 of this year. The first film's director, Catherine Hardwicke, dropped out for the next installment and was replaced by Chris Weitz, whose previous credits include "The Golden Compass" and "About a Boy."

"Twilight" put the nearly 2-year-old Summit on the Hollywood map. The start-up's first five releases included such box office flops as "Penelope," "Fly Me to the Moon" and "Sex Drive." Next up for the production and international sales company is "Push," a supernatural thriller with Dakota Fanning that opens Friday, and "Knowing," a mystery thriller starring Nicolas Cage, on March 20.

--Claudia Eller

Photos: Rob Friedman, left (Kevin Winter/Getty Images) and Jon Feltheimer (Vince Bucci/Getty Images)

To virtually no one's surprise, the Screen Actors Guild and the major studios announced late Wednesday that they will return to the negotiating table Tuesday to try to forge a new contract for actors.

The move comes only two days after SAG's board hired a new negotiator, John McGuire, and a new interim executive director, David White, following the ouster of Doug Allen. At the same time, the board formed a new "task force" to replace the previous negotating committee.

Moderates who orchestrated the shake-up are expected to move quickly to finalize a new contract, which will be modeled on deals secured over the past year by three other talent unions. Their challenge will be to obtain improvements over the studios' previous "final offer" that will be acceptable to members and demonstrate that the leadership didn't capitulate under pressure.

SAG members have been working without a contract since June 30.

-- Richard Verrier

Twentieth Century Fox has agreed to co-finance the third movie in the “Chronicles of Narnia” series, pending approval of the final script and shooting budget. If all goes as planned, Fox and Walden Media, which controls the movie rights to C.S. Lewis’ classic children's books, hope to begin production on "The Voyage of the Dawn Treader" by late summer so it will be ready for holiday 2010 release.

First, however, Fox and Walden have to hire a screenwriter to do another pass on the script that was last rewritten by Richard LaGravenese, whose credits include "Freedom Writers" and "The Horse Whisperer." The movie companies are looking to make the film for about $140 million. Michael Apted, who made "Amazing Grace" and the 1999 Bond flick "The World Is Not Enough," is on board to direct.

Fox is taking a financial gamble that Disney was unwilling to wage despite helping bankroll the first two films in the "Narnia" family franchise. Walden, owned by entrepreneur Phil Anschutz, was forced to seek a new financial partner on “Dawn Treader” after Disney balked at the cost and opted out.

Fox was the most likely partner because the studio already markets and distributes Walden movies under its Fox Walden label.

Over the last few weeks, Walden chief David Weil and “Narnia” producer Mark Johnson have held a series of meetings with top Fox executives, including movie chiefs Tom Rothman and Jim Gianopulos, to discuss script revisions and the movie's cost.

While the targeted budget of “Dawn Treader” is much lower than that of the last Narnia movie, “Prince Caspian,” which cost $225 million to produce, it's still a big gamble. Released by Disney last year, the sequel was much less popular than the first "Narnia" movie, “The Lion, the Witch and the Wardrobe.” The sequel grossed $419 million worldwide compared with its 2005 predecessor, which generated $745 million in ticket sales.

Disney and Walden hope that DVD sales of "Prince Caspian" will help pull the movie out of the red.

-- Claudia Eller

Photo: "The Chronicles of Narnia: Prince Caspian" is courtesy of Walt Disney Studios

Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.

The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies. 

A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.

A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

DreamWorks, Disney ink distribution deal

Steven Spielberg's DreamWorks finalized a distribution deal with Disney today, giving the filmmaker key financial demands he failed to extract from his longtime studio alley Universal Pictures: a commitment to risk hundreds of millions in film prints and advertising costs and to share its valuable pay TV slots.

As part of the deal, Disney will also give DreamWorks -- which has been struggling to raise money for its new studio -- a cash advance of about $100 million and a potential $75-million credit line which Spielberg & Co. can draw on for future productions. Disney's total outlay of $175 million is taking the form of a loan and is not an equity investment.

But, here's the catch. While DreamWorks desperately needs the cash advance to get its slate of movies rolling, it can't access Disney's money until it raises the first phase of its debt financing -- $325 million -- which will trigger a matching equity investment by Spielberg's new studio partner India's Reliance Entertainment.

"Disney has given us all the support we need to be in a position to raise our money and launch our company," said Stacey Snider, partner and chief executive of DreamWorks.

DreamWorks initially hoped to close its bank financing by the the end of the first quarter, but that now appears to be unlikely. A person close to the matter said that a more realistic time frame is late April.

Spielberg and Reliance will continue to fund overhead at DreamWorks, which employs about 60 people, until the deal is completed.

Disney's distribution agreement calls for DreamWorks to deliver up to 30 movies over the term of the deal. DreamWorks hopes to make up to six films a year for Disney's Touchstone Films banner. The first release -- yet to be identified -- will be in 2010.

Disney will market and release the movies worldwide everywhere except India, where Mumbai-based Reliance retains the distribution rights.

The Burbank studio will advance all the prints and advertising costs in exchange for collecting a distribution fee of what could amount to as much as 10%.

DreamWorks will also be able to piggyback on Disney's pay cable deal with Starz Entertainment, which provides movie producers with a significant revenue stream worth hundreds of millions of dollars. Last year, DreamWorks had failed at an attempt to secure its own pay-TV deal with HBO.

Spielberg hooked up with Reliance last year in a 50-50 venture to relaunch DreamWorks as a new studio with hoped-for funding of $1.25 billion. Reliance agreed to match in equity what DreamWorks raises in debt, but those efforts have been greatly hampered by the global credit crisis.

Surprising news of a pending deal between DreamWorks and Disney came late last week after a previously announced agreement between the Spielberg studio and Universal Pictures fell apart. Last fall, Universal had beat Disney and other potential distributors to the punch by cinching the right to distribute DreamWorks new movies. But, as DreamWorks' attempts to raise all of its funding by early this year became derailed by the financial markets, Spielberg and Reliance put pressure on Universal to change the original terms of its distribution deal.

Among sticking points between Universal and DreamWorks was that Universal refused to put up hundreds of millions in funds for prints and ads of DreamWorks movies -- an extremely risky investment in the volatile film business. DreamWorks also wanted more movie slots from Universal's deal with HBO than the studio was able to provide.

-- Claudia Eller

Left photo: Steven Spielberg. Credit: Hector Mata / AFP

Right photo: Stacey Snider. Credit: Vince Bucci / Getty Images

Think of it as a repeat of the swearing-in of President Obama in "an excess of prudence."

The Screen Actors Guild board voted for a second time to oust former executive director Doug Allen and replace the union's negotiating committee with a newly appointed task force dominated by moderates.

The move was widely anticipated, given that the board had previously taken such a vote last month by means of a "written assent."

That action, however, was challenged in a lawsuit filed last week by SAG President Alan Rosenberg and three other directors. Rosenberg has been a staunch ally of Allen and had refused to accept the board's appointment of David White as interim executive director and John McGuire as SAG's new chief negotiator. Last week, a judge denied a request for a temporary restraining order, saying the board had acted within its rights.

Sunday's vote -- supported by 59% of the 71-member board -- delivers a further blow to Rosenberg's legal challenge, which had threatened to delay a resumption in long-stalled contract negotiations with the studios. Talks are expected to resume on Feb. 17.

-- Richard Verrier

DreamWorks' planned distribution deal with Universal Pictures has collapsed as the parties are unable to agree upon final terms.

The failure of the agreement paves the way for Walt Disney Studios, which had earlier sought a distribution deal with DreamWorks, to step in as Steven Spielberg's new studio home, according to people familiar with the situation.

DreamWorks has been struggling for months to raise funds for its new studio, but efforts to raise the debt portion of its desired $1.25 billion in financing has been hampered by the global credit crisis.

DreamWorks, which split from former owner Paramount Pictures last year, is in need of some serious cash to continue financing overhead and jump-start plans to make about six movies a year. Spielberg's businesss partner, India's Reliance Entertainment, will not put up the equity portion of the financing until DreamWorks secures a matching sum in debt. DreamWorks' lead bank, JPMorgan Chase, so far has received a commitment for less than half of the $325-million loan that Spielberg hopes to have by late March. At that point, Reliance would match the bank contribution. DreamWorks is seeking to raise a total of about $1.25 billion in equity and debt.

Reliance had been pressuring Universal to advance DreamWorks at least $150 million in interim financing. But Universal, which in October announced a multi-year distribution deal with DreamWorks, balked and this morning announced it had halted talks with DreamWorks. "Over the past several weeks DreamWorks has demanded material changes to previously agreed-upon terms. It is clear DreamWorks' needs and Universal's business interests are no longer in alignment," Universal said.

Disney, which had been one of several DreamWorks distribution suitors, is in talks with the Spielberg camp and apparently willing to step in and make the investment needed by the filmmaker. Disney has always been Plan B, although Spielberg's first choice was Universal, where he began his career. Spielberg's creative partner Stacey Snider, who runs DreamWorks, used to be chairwoman of Universal Pictures.

This is the second time that Universal let DreamWorks slip away over money issues. Before being sold to Paramount in 2006 for $1.6 billion, DreamWorks had been in serious negotiations with Universal. But at the eleventh hour, Universal lowered its acquisition offer and the deal fell apart.

-- Claudia Eller

UPDATED at 4:59 p.m.:  With a judge having denied a temporary restraining order sought by Screen Actors Guild President Alan Rosenberg, the major studios are expected  to resume contract negotiations with the union. Talks have been tentatively scheduled for Feb. 17 and 18, sources familiar with the talks say.

A judge rebuffed for the second time a bid by Screen Actors Guild President Alan Rosenberg to block the union's new negotiating team from reviving contract talks with the major studios.

Rosenberg and three other board members filed a lawsuit this week seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee. They maintained the vote, taken by means of a "written assent," violated the state's business laws and the union's own bylaws.

But Los Angeles Superior Court Judge James Chalfant denied the request for a temporary restraining order, ruling that the board's action complied with the state law governing corporations. He also rejected arguments by Rosenberg's attorneys that a two-third vote was required to disband the committee.

The judge's decision removes what would have been an embarrassing setback for SAG. A restraining order could have unseated the union's newly appointed interim executive director and chief negotiator. They were tapped by the board after it fired former Executive Director Doug Allen, contending he mishandled negotiations.

Nonetheless, Thursday's ruling, which didn't dismiss the overall case, doesn't end the uncertainty over when contract negotiations with the studios will resume. Actors have been without a contract since June 30, 2008. SAG postponed planned negotiating sessions earlier this week because of the fight with its union president. 

And it's unlikely studios would agree to return to the bargaining table as long as there is a pending lawsuit challenging the legitimacy of negotiations.

Eric George, attorney for Rosenberg and the other directors, said he would file an appeal in the next few days with the California Court of Appeal.

Ned Vaughn, spokesman for the Unite for Strength group that represents so-called moderate board members, hailed the judge's ruling and called on Rosenberg to drop his complaint.

"It's outrageous that this lawsuit has further delayed negotiations,'' he said. "It's time for Alan Rosenberg to drop this and accept that SAG members voted for change. They want it now."

Rosenberg, who attended Thursday's hearing, declined to comment.

Thursday's ruling marked a second setback for Rosenberg, whose initial appeal for an injunction was denied after the judge cited several technical errors in the complaint.

“I’m pleased that we can put this matter behind us and dedicate our complete focus to the needs of Screen Actors Guild members. There’s a lot of work ahead of us,” said SAG interim National Executive Director David White.

-- Richard Verrier

Is French media giant Vivendi souring on its investment in NBC Universal -- perhaps un petit peu?

Mais non, says Vivendi Chief Executive Jean-Bernard Levy.

Nonetheless, Vivendi plans to write down the value of its 20% stake in NBC Universal next month when the French company reports its quarterly earnings. For now, Vivendi won't discuss the amount of the anticipated noncash charge, which is necessary to reflect the lower valuation of the U.S. company that boasts the NBC broadcast network, cable channels USA Network, Bravo and MSNBC, and Universal Studios. 

General Electric Co., whose stock has been pummeled in the market meltdown, owns the controlling 80% of NBC Universal. When GE and Vivendi combined their entertainment properties in 2004 to create NBC Universal, the enterprise was valued at more than $40 billion, making Vivendi's portion worth around $8 billion. (GE reiterated Tuesday that it had no plans to reduce the value of NBC that it carries on its battered books.) 

"It's a tough environment, but we are very pleased with NBC," Levy said during an interview in Santa Monica. "We are pleased with the profits that NBC has achieved; the overall performance of NBC U has been very good." 

Vivendi had an opportunity in December to divest its stake in NBC Universal  -- but it chose not to. The timing was not right because of the U.S. media company's depressed trading multiples, Levy said. Vivendi intends to hang on to its interest until the market bounces back.

How long will Vivendi be part of the peacock company? Levy would not tip his hand other than to say, "We are not long-term owners." He added that his company prefers to be in the "driver's seat" of its investments, and that is not the case with NBC.

Still, Levy is a big fan of the guy behind the wheel, NBC Universal CEO Jeff Zucker.

"I like him very much, he is an excellent manager and he certainly knows his business," Levy said of Zucker. The two CEOs spent time together last weekend in Tampa, where they attended the Super Bowl, which was televised by NBC and generated huge ratings.

Levy now is expecting Zucker to make similar gains in the financial field. "We are happy that we will share in the potential value creation that he and his team will implement," Levy said.

-- Meg James

Photo of Vivendi CEO Jean-Bernard Levy by Alex Pham/Los Angeles Times

A judge on Tuesday denied a temporary restraining order sought by SAG President Alan Rosenberg to block negotiations between the union and the major studios.

Rosenberg and three other board members are seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee, contending that the action violated the state's corporate code.

But Los Angeles Superior Court Judge James Chalfant denied the request for an injunction, citing several technical errors in the lawsuit, and ordered that the complaint be resubmitted. A hearing on the case will be held Thursday. The litigation has delayed contract negotiations that were set to resume this week.

"They are so desperate to hold on to their power that they are willing to burn down their own house,'' said New York SAG President Sam Freed, one of the board members being sued. Rosenberg declined to comment.

-- Richard Verrier

Financial news network Bloomberg Television today pulled the plug on its "Night Talk" program and bid goodbye to longtime anchor Mike Schneider.

Schneider's last program was Monday night.

Additional staff cuts and TV programming lineup changes are expected to be announced Wednesday. The moves are part of broad restructuring of the multimedia group, which includes Bloomberg Television and Bloomberg Radio, a person familiar with the situation said.

The private company, founded by New York Mayor Michael Bloomberg, generates about $6 billion a year in revenue.

But the shuffle has already begun. Bloomberg Television Managing Editor John Meehan left the company last week. His departure comes four months after former NBC, CBS and Sony BMG Music executive Andy Lack was hired to manage Bloomberg's television and radio operations. Lack brought in David Rhodes from the Fox News Channel to run the television operations.

Bloomberg operates 24 hours a day and has TV channels in 11 countries, but its sprawling operations are seen as disjointed and not making full use of its team of reporters in 143 bureaus around the world.

Although the company plans to eliminate programs and trim employees, it plans to hire additional staff this year to improve its programming to better position the company for growth, said the person familiar with the situation.

"While other news organizations are shrinking, we continue to expand, improving our existing products while investing in new ones," Bloomberg Chairman Peter Grauer said in a statement in October when Lack was hired.

-- Meg James

Summit Entertainment and Lionsgate aren't getting hitched. At least not yet, if ever.

The idea has been broached, according to insiders, but nothing is cooking. Such a corporate marriage, were it to happen, would unite a suddenly hot movie production company with Hollywood's leading independent movie and TV studio, which is behind the "Saw" and "Tyler Perry" franchises.

So far, however, Summit has played hard to get.

A few weeks before the late November release of Summit's box office smash "Twilight," the company headed by Patrick Wachsberger and Rob Friedman, was approached by Lionsgate about a potential merger. Lionsgate, well aware of the teen vampire film's hot pre-release buzz, made an offer for Summit but was rebuffed because the price was too low.

Lionsgate and Summit, which are located right around the corner from each other in Santa Monica, say privately that there have been no formal talks since last fall. That's not to say that Lionsgate Chief Executive Jon Feltheimer and Summit's Friedman, who are golfing buddies, would never discuss it between rounds. Who knows?

After all, "Twilight," which was made for $37 million and grossed $341 million worldwide, is a highly prized new movie franchise, one that would fit nicely with Lionsgate's strategy of producing moderately budgeted movies targeted at a specific audience. The sequel, "New Moon," based on the second novel of author Stephenie Meyer's popular four-book series, is due in theaters Nov. 25 of this year. The first film's director, Catherine Hardwicke, dropped out for the next installment and was replaced by Chris Weitz, whose previous credits include "The Golden Compass" and "About a Boy."

"Twilight" put the nearly 2-year-old Summit on the Hollywood map. The start-up's first five releases included such box office flops as "Penelope," "Fly Me to the Moon" and "Sex Drive." Next up for the production and international sales company is "Push," a supernatural thriller with Dakota Fanning that opens Friday, and "Knowing," a mystery thriller starring Nicolas Cage, on March 20.

--Claudia Eller

Photos: Rob Friedman, left (Kevin Winter/Getty Images) and Jon Feltheimer (Vince Bucci/Getty Images)

To virtually no one's surprise, the Screen Actors Guild and the major studios announced late Wednesday that they will return to the negotiating table Tuesday to try to forge a new contract for actors.

The move comes only two days after SAG's board hired a new negotiator, John McGuire, and a new interim executive director, David White, following the ouster of Doug Allen. At the same time, the board formed a new "task force" to replace the previous negotating committee.

Moderates who orchestrated the shake-up are expected to move quickly to finalize a new contract, which will be modeled on deals secured over the past year by three other talent unions. Their challenge will be to obtain improvements over the studios' previous "final offer" that will be acceptable to members and demonstrate that the leadership didn't capitulate under pressure.

SAG members have been working without a contract since June 30.

-- Richard Verrier

Twentieth Century Fox has agreed to co-finance the third movie in the “Chronicles of Narnia” series, pending approval of the final script and shooting budget. If all goes as planned, Fox and Walden Media, which controls the movie rights to C.S. Lewis’ classic children's books, hope to begin production on "The Voyage of the Dawn Treader" by late summer so it will be ready for holiday 2010 release.

First, however, Fox and Walden have to hire a screenwriter to do another pass on the script that was last rewritten by Richard LaGravenese, whose credits include "Freedom Writers" and "The Horse Whisperer." The movie companies are looking to make the film for about $140 million. Michael Apted, who made "Amazing Grace" and the 1999 Bond flick "The World Is Not Enough," is on board to direct.

Fox is taking a financial gamble that Disney was unwilling to wage despite helping bankroll the first two films in the "Narnia" family franchise. Walden, owned by entrepreneur Phil Anschutz, was forced to seek a new financial partner on “Dawn Treader” after Disney balked at the cost and opted out.

Fox was the most likely partner because the studio already markets and distributes Walden movies under its Fox Walden label.

Over the last few weeks, Walden chief David Weil and “Narnia” producer Mark Johnson have held a series of meetings with top Fox executives, including movie chiefs Tom Rothman and Jim Gianopulos, to discuss script revisions and the movie's cost.

While the targeted budget of “Dawn Treader” is much lower than that of the last Narnia movie, “Prince Caspian,” which cost $225 million to produce, it's still a big gamble. Released by Disney last year, the sequel was much less popular than the first "Narnia" movie, “The Lion, the Witch and the Wardrobe.” The sequel grossed $419 million worldwide compared with its 2005 predecessor, which generated $745 million in ticket sales.

Disney and Walden hope that DVD sales of "Prince Caspian" will help pull the movie out of the red.

-- Claudia Eller

Photo: "The Chronicles of Narnia: Prince Caspian" is courtesy of Walt Disney Studios

Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.

The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies. 

A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.

A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Screen Actors Guild board fires Doug Allen -- again

Think of it as a repeat of the swearing-in of President Obama in "an excess of prudence."

The Screen Actors Guild board voted for a second time to oust former executive director Doug Allen and replace the union's negotiating committee with a newly appointed task force dominated by moderates.

The move was widely anticipated, given that the board had previously taken such a vote last month by means of a "written assent."

That action, however, was challenged in a lawsuit filed last week by SAG President Alan Rosenberg and three other directors. Rosenberg has been a staunch ally of Allen and had refused to accept the board's appointment of David White as interim executive director and John McGuire as SAG's new chief negotiator. Last week, a judge denied a request for a temporary restraining order, saying the board had acted within its rights.

Sunday's vote -- supported by 59% of the 71-member board -- delivers a further blow to Rosenberg's legal challenge, which had threatened to delay a resumption in long-stalled contract negotiations with the studios. Talks are expected to resume on Feb. 17.

-- Richard Verrier

DreamWorks' planned distribution deal with Universal Pictures has collapsed as the parties are unable to agree upon final terms.

The failure of the agreement paves the way for Walt Disney Studios, which had earlier sought a distribution deal with DreamWorks, to step in as Steven Spielberg's new studio home, according to people familiar with the situation.

DreamWorks has been struggling for months to raise funds for its new studio, but efforts to raise the debt portion of its desired $1.25 billion in financing has been hampered by the global credit crisis.

DreamWorks, which split from former owner Paramount Pictures last year, is in need of some serious cash to continue financing overhead and jump-start plans to make about six movies a year. Spielberg's businesss partner, India's Reliance Entertainment, will not put up the equity portion of the financing until DreamWorks secures a matching sum in debt. DreamWorks' lead bank, JPMorgan Chase, so far has received a commitment for less than half of the $325-million loan that Spielberg hopes to have by late March. At that point, Reliance would match the bank contribution. DreamWorks is seeking to raise a total of about $1.25 billion in equity and debt.

Reliance had been pressuring Universal to advance DreamWorks at least $150 million in interim financing. But Universal, which in October announced a multi-year distribution deal with DreamWorks, balked and this morning announced it had halted talks with DreamWorks. "Over the past several weeks DreamWorks has demanded material changes to previously agreed-upon terms. It is clear DreamWorks' needs and Universal's business interests are no longer in alignment," Universal said.

Disney, which had been one of several DreamWorks distribution suitors, is in talks with the Spielberg camp and apparently willing to step in and make the investment needed by the filmmaker. Disney has always been Plan B, although Spielberg's first choice was Universal, where he began his career. Spielberg's creative partner Stacey Snider, who runs DreamWorks, used to be chairwoman of Universal Pictures.

This is the second time that Universal let DreamWorks slip away over money issues. Before being sold to Paramount in 2006 for $1.6 billion, DreamWorks had been in serious negotiations with Universal. But at the eleventh hour, Universal lowered its acquisition offer and the deal fell apart.

-- Claudia Eller

UPDATED at 4:59 p.m.:  With a judge having denied a temporary restraining order sought by Screen Actors Guild President Alan Rosenberg, the major studios are expected  to resume contract negotiations with the union. Talks have been tentatively scheduled for Feb. 17 and 18, sources familiar with the talks say.

A judge rebuffed for the second time a bid by Screen Actors Guild President Alan Rosenberg to block the union's new negotiating team from reviving contract talks with the major studios.

Rosenberg and three other board members filed a lawsuit this week seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee. They maintained the vote, taken by means of a "written assent," violated the state's business laws and the union's own bylaws.

But Los Angeles Superior Court Judge James Chalfant denied the request for a temporary restraining order, ruling that the board's action complied with the state law governing corporations. He also rejected arguments by Rosenberg's attorneys that a two-third vote was required to disband the committee.

The judge's decision removes what would have been an embarrassing setback for SAG. A restraining order could have unseated the union's newly appointed interim executive director and chief negotiator. They were tapped by the board after it fired former Executive Director Doug Allen, contending he mishandled negotiations.

Nonetheless, Thursday's ruling, which didn't dismiss the overall case, doesn't end the uncertainty over when contract negotiations with the studios will resume. Actors have been without a contract since June 30, 2008. SAG postponed planned negotiating sessions earlier this week because of the fight with its union president. 

And it's unlikely studios would agree to return to the bargaining table as long as there is a pending lawsuit challenging the legitimacy of negotiations.

Eric George, attorney for Rosenberg and the other directors, said he would file an appeal in the next few days with the California Court of Appeal.

Ned Vaughn, spokesman for the Unite for Strength group that represents so-called moderate board members, hailed the judge's ruling and called on Rosenberg to drop his complaint.

"It's outrageous that this lawsuit has further delayed negotiations,'' he said. "It's time for Alan Rosenberg to drop this and accept that SAG members voted for change. They want it now."

Rosenberg, who attended Thursday's hearing, declined to comment.

Thursday's ruling marked a second setback for Rosenberg, whose initial appeal for an injunction was denied after the judge cited several technical errors in the complaint.

“I’m pleased that we can put this matter behind us and dedicate our complete focus to the needs of Screen Actors Guild members. There’s a lot of work ahead of us,” said SAG interim National Executive Director David White.

-- Richard Verrier

Is French media giant Vivendi souring on its investment in NBC Universal -- perhaps un petit peu?

Mais non, says Vivendi Chief Executive Jean-Bernard Levy.

Nonetheless, Vivendi plans to write down the value of its 20% stake in NBC Universal next month when the French company reports its quarterly earnings. For now, Vivendi won't discuss the amount of the anticipated noncash charge, which is necessary to reflect the lower valuation of the U.S. company that boasts the NBC broadcast network, cable channels USA Network, Bravo and MSNBC, and Universal Studios. 

General Electric Co., whose stock has been pummeled in the market meltdown, owns the controlling 80% of NBC Universal. When GE and Vivendi combined their entertainment properties in 2004 to create NBC Universal, the enterprise was valued at more than $40 billion, making Vivendi's portion worth around $8 billion. (GE reiterated Tuesday that it had no plans to reduce the value of NBC that it carries on its battered books.) 

"It's a tough environment, but we are very pleased with NBC," Levy said during an interview in Santa Monica. "We are pleased with the profits that NBC has achieved; the overall performance of NBC U has been very good." 

Vivendi had an opportunity in December to divest its stake in NBC Universal  -- but it chose not to. The timing was not right because of the U.S. media company's depressed trading multiples, Levy said. Vivendi intends to hang on to its interest until the market bounces back.

How long will Vivendi be part of the peacock company? Levy would not tip his hand other than to say, "We are not long-term owners." He added that his company prefers to be in the "driver's seat" of its investments, and that is not the case with NBC.

Still, Levy is a big fan of the guy behind the wheel, NBC Universal CEO Jeff Zucker.

"I like him very much, he is an excellent manager and he certainly knows his business," Levy said of Zucker. The two CEOs spent time together last weekend in Tampa, where they attended the Super Bowl, which was televised by NBC and generated huge ratings.

Levy now is expecting Zucker to make similar gains in the financial field. "We are happy that we will share in the potential value creation that he and his team will implement," Levy said.

-- Meg James

Photo of Vivendi CEO Jean-Bernard Levy by Alex Pham/Los Angeles Times

A judge on Tuesday denied a temporary restraining order sought by SAG President Alan Rosenberg to block negotiations between the union and the major studios.

Rosenberg and three other board members are seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee, contending that the action violated the state's corporate code.

But Los Angeles Superior Court Judge James Chalfant denied the request for an injunction, citing several technical errors in the lawsuit, and ordered that the complaint be resubmitted. A hearing on the case will be held Thursday. The litigation has delayed contract negotiations that were set to resume this week.

"They are so desperate to hold on to their power that they are willing to burn down their own house,'' said New York SAG President Sam Freed, one of the board members being sued. Rosenberg declined to comment.

-- Richard Verrier

Financial news network Bloomberg Television today pulled the plug on its "Night Talk" program and bid goodbye to longtime anchor Mike Schneider.

Schneider's last program was Monday night.

Additional staff cuts and TV programming lineup changes are expected to be announced Wednesday. The moves are part of broad restructuring of the multimedia group, which includes Bloomberg Television and Bloomberg Radio, a person familiar with the situation said.

The private company, founded by New York Mayor Michael Bloomberg, generates about $6 billion a year in revenue.

But the shuffle has already begun. Bloomberg Television Managing Editor John Meehan left the company last week. His departure comes four months after former NBC, CBS and Sony BMG Music executive Andy Lack was hired to manage Bloomberg's television and radio operations. Lack brought in David Rhodes from the Fox News Channel to run the television operations.

Bloomberg operates 24 hours a day and has TV channels in 11 countries, but its sprawling operations are seen as disjointed and not making full use of its team of reporters in 143 bureaus around the world.

Although the company plans to eliminate programs and trim employees, it plans to hire additional staff this year to improve its programming to better position the company for growth, said the person familiar with the situation.

"While other news organizations are shrinking, we continue to expand, improving our existing products while investing in new ones," Bloomberg Chairman Peter Grauer said in a statement in October when Lack was hired.

-- Meg James

Summit Entertainment and Lionsgate aren't getting hitched. At least not yet, if ever.

The idea has been broached, according to insiders, but nothing is cooking. Such a corporate marriage, were it to happen, would unite a suddenly hot movie production company with Hollywood's leading independent movie and TV studio, which is behind the "Saw" and "Tyler Perry" franchises.

So far, however, Summit has played hard to get.

A few weeks before the late November release of Summit's box office smash "Twilight," the company headed by Patrick Wachsberger and Rob Friedman, was approached by Lionsgate about a potential merger. Lionsgate, well aware of the teen vampire film's hot pre-release buzz, made an offer for Summit but was rebuffed because the price was too low.

Lionsgate and Summit, which are located right around the corner from each other in Santa Monica, say privately that there have been no formal talks since last fall. That's not to say that Lionsgate Chief Executive Jon Feltheimer and Summit's Friedman, who are golfing buddies, would never discuss it between rounds. Who knows?

After all, "Twilight," which was made for $37 million and grossed $341 million worldwide, is a highly prized new movie franchise, one that would fit nicely with Lionsgate's strategy of producing moderately budgeted movies targeted at a specific audience. The sequel, "New Moon," based on the second novel of author Stephenie Meyer's popular four-book series, is due in theaters Nov. 25 of this year. The first film's director, Catherine Hardwicke, dropped out for the next installment and was replaced by Chris Weitz, whose previous credits include "The Golden Compass" and "About a Boy."

"Twilight" put the nearly 2-year-old Summit on the Hollywood map. The start-up's first five releases included such box office flops as "Penelope," "Fly Me to the Moon" and "Sex Drive." Next up for the production and international sales company is "Push," a supernatural thriller with Dakota Fanning that opens Friday, and "Knowing," a mystery thriller starring Nicolas Cage, on March 20.

--Claudia Eller

Photos: Rob Friedman, left (Kevin Winter/Getty Images) and Jon Feltheimer (Vince Bucci/Getty Images)

To virtually no one's surprise, the Screen Actors Guild and the major studios announced late Wednesday that they will return to the negotiating table Tuesday to try to forge a new contract for actors.

The move comes only two days after SAG's board hired a new negotiator, John McGuire, and a new interim executive director, David White, following the ouster of Doug Allen. At the same time, the board formed a new "task force" to replace the previous negotating committee.

Moderates who orchestrated the shake-up are expected to move quickly to finalize a new contract, which will be modeled on deals secured over the past year by three other talent unions. Their challenge will be to obtain improvements over the studios' previous "final offer" that will be acceptable to members and demonstrate that the leadership didn't capitulate under pressure.

SAG members have been working without a contract since June 30.

-- Richard Verrier

Twentieth Century Fox has agreed to co-finance the third movie in the “Chronicles of Narnia” series, pending approval of the final script and shooting budget. If all goes as planned, Fox and Walden Media, which controls the movie rights to C.S. Lewis’ classic children's books, hope to begin production on "The Voyage of the Dawn Treader" by late summer so it will be ready for holiday 2010 release.

First, however, Fox and Walden have to hire a screenwriter to do another pass on the script that was last rewritten by Richard LaGravenese, whose credits include "Freedom Writers" and "The Horse Whisperer." The movie companies are looking to make the film for about $140 million. Michael Apted, who made "Amazing Grace" and the 1999 Bond flick "The World Is Not Enough," is on board to direct.

Fox is taking a financial gamble that Disney was unwilling to wage despite helping bankroll the first two films in the "Narnia" family franchise. Walden, owned by entrepreneur Phil Anschutz, was forced to seek a new financial partner on “Dawn Treader” after Disney balked at the cost and opted out.

Fox was the most likely partner because the studio already markets and distributes Walden movies under its Fox Walden label.

Over the last few weeks, Walden chief David Weil and “Narnia” producer Mark Johnson have held a series of meetings with top Fox executives, including movie chiefs Tom Rothman and Jim Gianopulos, to discuss script revisions and the movie's cost.

While the targeted budget of “Dawn Treader” is much lower than that of the last Narnia movie, “Prince Caspian,” which cost $225 million to produce, it's still a big gamble. Released by Disney last year, the sequel was much less popular than the first "Narnia" movie, “The Lion, the Witch and the Wardrobe.” The sequel grossed $419 million worldwide compared with its 2005 predecessor, which generated $745 million in ticket sales.

Disney and Walden hope that DVD sales of "Prince Caspian" will help pull the movie out of the red.

-- Claudia Eller

Photo: "The Chronicles of Narnia: Prince Caspian" is courtesy of Walt Disney Studios

Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.

The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies. 

A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.

A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Disney may upstage Universal as DreamWorks' new studio home

DreamWorks' planned distribution deal with Universal Pictures has collapsed as the parties are unable to agree upon final terms.

The failure of the agreement paves the way for Walt Disney Studios, which had earlier sought a distribution deal with DreamWorks, to step in as Steven Spielberg's new studio home, according to people familiar with the situation.

DreamWorks has been struggling for months to raise funds for its new studio, but efforts to raise the debt portion of its desired $1.25 billion in financing has been hampered by the global credit crisis.

DreamWorks, which split from former owner Paramount Pictures last year, is in need of some serious cash to continue financing overhead and jump-start plans to make about six movies a year. Spielberg's businesss partner, India's Reliance Entertainment, will not put up the equity portion of the financing until DreamWorks secures a matching sum in debt. DreamWorks' lead bank, JPMorgan Chase, so far has received a commitment for less than half of the $325-million loan that Spielberg hopes to have by late March. At that point, Reliance would match the bank contribution. DreamWorks is seeking to raise a total of about $1.25 billion in equity and debt.

Reliance had been pressuring Universal to advance DreamWorks at least $150 million in interim financing. But Universal, which in October announced a multi-year distribution deal with DreamWorks, balked and this morning announced it had halted talks with DreamWorks. "Over the past several weeks DreamWorks has demanded material changes to previously agreed-upon terms. It is clear DreamWorks' needs and Universal's business interests are no longer in alignment," Universal said.

Disney, which had been one of several DreamWorks distribution suitors, is in talks with the Spielberg camp and apparently willing to step in and make the investment needed by the filmmaker. Disney has always been Plan B, although Spielberg's first choice was Universal, where he began his career. Spielberg's creative partner Stacey Snider, who runs DreamWorks, used to be chairwoman of Universal Pictures.

This is the second time that Universal let DreamWorks slip away over money issues. Before being sold to Paramount in 2006 for $1.6 billion, DreamWorks had been in serious negotiations with Universal. But at the eleventh hour, Universal lowered its acquisition offer and the deal fell apart.

-- Claudia Eller

UPDATED at 4:59 p.m.:  With a judge having denied a temporary restraining order sought by Screen Actors Guild President Alan Rosenberg, the major studios are expected  to resume contract negotiations with the union. Talks have been tentatively scheduled for Feb. 17 and 18, sources familiar with the talks say.

A judge rebuffed for the second time a bid by Screen Actors Guild President Alan Rosenberg to block the union's new negotiating team from reviving contract talks with the major studios.

Rosenberg and three other board members filed a lawsuit this week seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee. They maintained the vote, taken by means of a "written assent," violated the state's business laws and the union's own bylaws.

But Los Angeles Superior Court Judge James Chalfant denied the request for a temporary restraining order, ruling that the board's action complied with the state law governing corporations. He also rejected arguments by Rosenberg's attorneys that a two-third vote was required to disband the committee.

The judge's decision removes what would have been an embarrassing setback for SAG. A restraining order could have unseated the union's newly appointed interim executive director and chief negotiator. They were tapped by the board after it fired former Executive Director Doug Allen, contending he mishandled negotiations.

Nonetheless, Thursday's ruling, which didn't dismiss the overall case, doesn't end the uncertainty over when contract negotiations with the studios will resume. Actors have been without a contract since June 30, 2008. SAG postponed planned negotiating sessions earlier this week because of the fight with its union president. 

And it's unlikely studios would agree to return to the bargaining table as long as there is a pending lawsuit challenging the legitimacy of negotiations.

Eric George, attorney for Rosenberg and the other directors, said he would file an appeal in the next few days with the California Court of Appeal.

Ned Vaughn, spokesman for the Unite for Strength group that represents so-called moderate board members, hailed the judge's ruling and called on Rosenberg to drop his complaint.

"It's outrageous that this lawsuit has further delayed negotiations,'' he said. "It's time for Alan Rosenberg to drop this and accept that SAG members voted for change. They want it now."

Rosenberg, who attended Thursday's hearing, declined to comment.

Thursday's ruling marked a second setback for Rosenberg, whose initial appeal for an injunction was denied after the judge cited several technical errors in the complaint.

“I’m pleased that we can put this matter behind us and dedicate our complete focus to the needs of Screen Actors Guild members. There’s a lot of work ahead of us,” said SAG interim National Executive Director David White.

-- Richard Verrier

Is French media giant Vivendi souring on its investment in NBC Universal -- perhaps un petit peu?

Mais non, says Vivendi Chief Executive Jean-Bernard Levy.

Nonetheless, Vivendi plans to write down the value of its 20% stake in NBC Universal next month when the French company reports its quarterly earnings. For now, Vivendi won't discuss the amount of the anticipated noncash charge, which is necessary to reflect the lower valuation of the U.S. company that boasts the NBC broadcast network, cable channels USA Network, Bravo and MSNBC, and Universal Studios. 

General Electric Co., whose stock has been pummeled in the market meltdown, owns the controlling 80% of NBC Universal. When GE and Vivendi combined their entertainment properties in 2004 to create NBC Universal, the enterprise was valued at more than $40 billion, making Vivendi's portion worth around $8 billion. (GE reiterated Tuesday that it had no plans to reduce the value of NBC that it carries on its battered books.) 

"It's a tough environment, but we are very pleased with NBC," Levy said during an interview in Santa Monica. "We are pleased with the profits that NBC has achieved; the overall performance of NBC U has been very good." 

Vivendi had an opportunity in December to divest its stake in NBC Universal  -- but it chose not to. The timing was not right because of the U.S. media company's depressed trading multiples, Levy said. Vivendi intends to hang on to its interest until the market bounces back.

How long will Vivendi be part of the peacock company? Levy would not tip his hand other than to say, "We are not long-term owners." He added that his company prefers to be in the "driver's seat" of its investments, and that is not the case with NBC.

Still, Levy is a big fan of the guy behind the wheel, NBC Universal CEO Jeff Zucker.

"I like him very much, he is an excellent manager and he certainly knows his business," Levy said of Zucker. The two CEOs spent time together last weekend in Tampa, where they attended the Super Bowl, which was televised by NBC and generated huge ratings.

Levy now is expecting Zucker to make similar gains in the financial field. "We are happy that we will share in the potential value creation that he and his team will implement," Levy said.

-- Meg James

Photo of Vivendi CEO Jean-Bernard Levy by Alex Pham/Los Angeles Times

A judge on Tuesday denied a temporary restraining order sought by SAG President Alan Rosenberg to block negotiations between the union and the major studios.

Rosenberg and three other board members are seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee, contending that the action violated the state's corporate code.

But Los Angeles Superior Court Judge James Chalfant denied the request for an injunction, citing several technical errors in the lawsuit, and ordered that the complaint be resubmitted. A hearing on the case will be held Thursday. The litigation has delayed contract negotiations that were set to resume this week.

"They are so desperate to hold on to their power that they are willing to burn down their own house,'' said New York SAG President Sam Freed, one of the board members being sued. Rosenberg declined to comment.

-- Richard Verrier

Financial news network Bloomberg Television today pulled the plug on its "Night Talk" program and bid goodbye to longtime anchor Mike Schneider.

Schneider's last program was Monday night.

Additional staff cuts and TV programming lineup changes are expected to be announced Wednesday. The moves are part of broad restructuring of the multimedia group, which includes Bloomberg Television and Bloomberg Radio, a person familiar with the situation said.

The private company, founded by New York Mayor Michael Bloomberg, generates about $6 billion a year in revenue.

But the shuffle has already begun. Bloomberg Television Managing Editor John Meehan left the company last week. His departure comes four months after former NBC, CBS and Sony BMG Music executive Andy Lack was hired to manage Bloomberg's television and radio operations. Lack brought in David Rhodes from the Fox News Channel to run the television operations.

Bloomberg operates 24 hours a day and has TV channels in 11 countries, but its sprawling operations are seen as disjointed and not making full use of its team of reporters in 143 bureaus around the world.

Although the company plans to eliminate programs and trim employees, it plans to hire additional staff this year to improve its programming to better position the company for growth, said the person familiar with the situation.

"While other news organizations are shrinking, we continue to expand, improving our existing products while investing in new ones," Bloomberg Chairman Peter Grauer said in a statement in October when Lack was hired.

-- Meg James

Summit Entertainment and Lionsgate aren't getting hitched. At least not yet, if ever.

The idea has been broached, according to insiders, but nothing is cooking. Such a corporate marriage, were it to happen, would unite a suddenly hot movie production company with Hollywood's leading independent movie and TV studio, which is behind the "Saw" and "Tyler Perry" franchises.

So far, however, Summit has played hard to get.

A few weeks before the late November release of Summit's box office smash "Twilight," the company headed by Patrick Wachsberger and Rob Friedman, was approached by Lionsgate about a potential merger. Lionsgate, well aware of the teen vampire film's hot pre-release buzz, made an offer for Summit but was rebuffed because the price was too low.

Lionsgate and Summit, which are located right around the corner from each other in Santa Monica, say privately that there have been no formal talks since last fall. That's not to say that Lionsgate Chief Executive Jon Feltheimer and Summit's Friedman, who are golfing buddies, would never discuss it between rounds. Who knows?

After all, "Twilight," which was made for $37 million and grossed $341 million worldwide, is a highly prized new movie franchise, one that would fit nicely with Lionsgate's strategy of producing moderately budgeted movies targeted at a specific audience. The sequel, "New Moon," based on the second novel of author Stephenie Meyer's popular four-book series, is due in theaters Nov. 25 of this year. The first film's director, Catherine Hardwicke, dropped out for the next installment and was replaced by Chris Weitz, whose previous credits include "The Golden Compass" and "About a Boy."

"Twilight" put the nearly 2-year-old Summit on the Hollywood map. The start-up's first five releases included such box office flops as "Penelope," "Fly Me to the Moon" and "Sex Drive." Next up for the production and international sales company is "Push," a supernatural thriller with Dakota Fanning that opens Friday, and "Knowing," a mystery thriller starring Nicolas Cage, on March 20.

--Claudia Eller

Photos: Rob Friedman, left (Kevin Winter/Getty Images) and Jon Feltheimer (Vince Bucci/Getty Images)

To virtually no one's surprise, the Screen Actors Guild and the major studios announced late Wednesday that they will return to the negotiating table Tuesday to try to forge a new contract for actors.

The move comes only two days after SAG's board hired a new negotiator, John McGuire, and a new interim executive director, David White, following the ouster of Doug Allen. At the same time, the board formed a new "task force" to replace the previous negotating committee.

Moderates who orchestrated the shake-up are expected to move quickly to finalize a new contract, which will be modeled on deals secured over the past year by three other talent unions. Their challenge will be to obtain improvements over the studios' previous "final offer" that will be acceptable to members and demonstrate that the leadership didn't capitulate under pressure.

SAG members have been working without a contract since June 30.

-- Richard Verrier

Twentieth Century Fox has agreed to co-finance the third movie in the “Chronicles of Narnia” series, pending approval of the final script and shooting budget. If all goes as planned, Fox and Walden Media, which controls the movie rights to C.S. Lewis’ classic children's books, hope to begin production on "The Voyage of the Dawn Treader" by late summer so it will be ready for holiday 2010 release.

First, however, Fox and Walden have to hire a screenwriter to do another pass on the script that was last rewritten by Richard LaGravenese, whose credits include "Freedom Writers" and "The Horse Whisperer." The movie companies are looking to make the film for about $140 million. Michael Apted, who made "Amazing Grace" and the 1999 Bond flick "The World Is Not Enough," is on board to direct.

Fox is taking a financial gamble that Disney was unwilling to wage despite helping bankroll the first two films in the "Narnia" family franchise. Walden, owned by entrepreneur Phil Anschutz, was forced to seek a new financial partner on “Dawn Treader” after Disney balked at the cost and opted out.

Fox was the most likely partner because the studio already markets and distributes Walden movies under its Fox Walden label.

Over the last few weeks, Walden chief David Weil and “Narnia” producer Mark Johnson have held a series of meetings with top Fox executives, including movie chiefs Tom Rothman and Jim Gianopulos, to discuss script revisions and the movie's cost.

While the targeted budget of “Dawn Treader” is much lower than that of the last Narnia movie, “Prince Caspian,” which cost $225 million to produce, it's still a big gamble. Released by Disney last year, the sequel was much less popular than the first "Narnia" movie, “The Lion, the Witch and the Wardrobe.” The sequel grossed $419 million worldwide compared with its 2005 predecessor, which generated $745 million in ticket sales.

Disney and Walden hope that DVD sales of "Prince Caspian" will help pull the movie out of the red.

-- Claudia Eller

Photo: "The Chronicles of Narnia: Prince Caspian" is courtesy of Walt Disney Studios

Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.

The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies. 

A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.

A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Judge deals blow to SAG's Rosenberg [UPDATE]

UPDATED at 4:59 p.m.:  With a judge having denied a temporary restraining order sought by Screen Actors Guild President Alan Rosenberg, the major studios are expected  to resume contract negotiations with the union. Talks have been tentatively scheduled for Feb. 17 and 18, sources familiar with the talks say.

A judge rebuffed for the second time a bid by Screen Actors Guild President Alan Rosenberg to block the union's new negotiating team from reviving contract talks with the major studios.

Rosenberg and three other board members filed a lawsuit this week seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee. They maintained the vote, taken by means of a "written assent," violated the state's business laws and the union's own bylaws.

But Los Angeles Superior Court Judge James Chalfant denied the request for a temporary restraining order, ruling that the board's action complied with the state law governing corporations. He also rejected arguments by Rosenberg's attorneys that a two-third vote was required to disband the committee.

The judge's decision removes what would have been an embarrassing setback for SAG. A restraining order could have unseated the union's newly appointed interim executive director and chief negotiator. They were tapped by the board after it fired former Executive Director Doug Allen, contending he mishandled negotiations.

Nonetheless, Thursday's ruling, which didn't dismiss the overall case, doesn't end the uncertainty over when contract negotiations with the studios will resume. Actors have been without a contract since June 30, 2008. SAG postponed planned negotiating sessions earlier this week because of the fight with its union president. 

And it's unlikely studios would agree to return to the bargaining table as long as there is a pending lawsuit challenging the legitimacy of negotiations.

Eric George, attorney for Rosenberg and the other directors, said he would file an appeal in the next few days with the California Court of Appeal.

Ned Vaughn, spokesman for the Unite for Strength group that represents so-called moderate board members, hailed the judge's ruling and called on Rosenberg to drop his complaint.

"It's outrageous that this lawsuit has further delayed negotiations,'' he said. "It's time for Alan Rosenberg to drop this and accept that SAG members voted for change. They want it now."

Rosenberg, who attended Thursday's hearing, declined to comment.

Thursday's ruling marked a second setback for Rosenberg, whose initial appeal for an injunction was denied after the judge cited several technical errors in the complaint.

“I’m pleased that we can put this matter behind us and dedicate our complete focus to the needs of Screen Actors Guild members. There’s a lot of work ahead of us,” said SAG interim National Executive Director David White.

-- Richard Verrier

Is French media giant Vivendi souring on its investment in NBC Universal -- perhaps un petit peu?

Mais non, says Vivendi Chief Executive Jean-Bernard Levy.

Nonetheless, Vivendi plans to write down the value of its 20% stake in NBC Universal next month when the French company reports its quarterly earnings. For now, Vivendi won't discuss the amount of the anticipated noncash charge, which is necessary to reflect the lower valuation of the U.S. company that boasts the NBC broadcast network, cable channels USA Network, Bravo and MSNBC, and Universal Studios. 

General Electric Co., whose stock has been pummeled in the market meltdown, owns the controlling 80% of NBC Universal. When GE and Vivendi combined their entertainment properties in 2004 to create NBC Universal, the enterprise was valued at more than $40 billion, making Vivendi's portion worth around $8 billion. (GE reiterated Tuesday that it had no plans to reduce the value of NBC that it carries on its battered books.) 

"It's a tough environment, but we are very pleased with NBC," Levy said during an interview in Santa Monica. "We are pleased with the profits that NBC has achieved; the overall performance of NBC U has been very good." 

Vivendi had an opportunity in December to divest its stake in NBC Universal  -- but it chose not to. The timing was not right because of the U.S. media company's depressed trading multiples, Levy said. Vivendi intends to hang on to its interest until the market bounces back.

How long will Vivendi be part of the peacock company? Levy would not tip his hand other than to say, "We are not long-term owners." He added that his company prefers to be in the "driver's seat" of its investments, and that is not the case with NBC.

Still, Levy is a big fan of the guy behind the wheel, NBC Universal CEO Jeff Zucker.

"I like him very much, he is an excellent manager and he certainly knows his business," Levy said of Zucker. The two CEOs spent time together last weekend in Tampa, where they attended the Super Bowl, which was televised by NBC and generated huge ratings.

Levy now is expecting Zucker to make similar gains in the financial field. "We are happy that we will share in the potential value creation that he and his team will implement," Levy said.

-- Meg James

Photo of Vivendi CEO Jean-Bernard Levy by Alex Pham/Los Angeles Times

A judge on Tuesday denied a temporary restraining order sought by SAG President Alan Rosenberg to block negotiations between the union and the major studios.

Rosenberg and three other board members are seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee, contending that the action violated the state's corporate code.

But Los Angeles Superior Court Judge James Chalfant denied the request for an injunction, citing several technical errors in the lawsuit, and ordered that the complaint be resubmitted. A hearing on the case will be held Thursday. The litigation has delayed contract negotiations that were set to resume this week.

"They are so desperate to hold on to their power that they are willing to burn down their own house,'' said New York SAG President Sam Freed, one of the board members being sued. Rosenberg declined to comment.

-- Richard Verrier

Financial news network Bloomberg Television today pulled the plug on its "Night Talk" program and bid goodbye to longtime anchor Mike Schneider.

Schneider's last program was Monday night.

Additional staff cuts and TV programming lineup changes are expected to be announced Wednesday. The moves are part of broad restructuring of the multimedia group, which includes Bloomberg Television and Bloomberg Radio, a person familiar with the situation said.

The private company, founded by New York Mayor Michael Bloomberg, generates about $6 billion a year in revenue.

But the shuffle has already begun. Bloomberg Television Managing Editor John Meehan left the company last week. His departure comes four months after former NBC, CBS and Sony BMG Music executive Andy Lack was hired to manage Bloomberg's television and radio operations. Lack brought in David Rhodes from the Fox News Channel to run the television operations.

Bloomberg operates 24 hours a day and has TV channels in 11 countries, but its sprawling operations are seen as disjointed and not making full use of its team of reporters in 143 bureaus around the world.

Although the company plans to eliminate programs and trim employees, it plans to hire additional staff this year to improve its programming to better position the company for growth, said the person familiar with the situation.

"While other news organizations are shrinking, we continue to expand, improving our existing products while investing in new ones," Bloomberg Chairman Peter Grauer said in a statement in October when Lack was hired.

-- Meg James

Summit Entertainment and Lionsgate aren't getting hitched. At least not yet, if ever.

The idea has been broached, according to insiders, but nothing is cooking. Such a corporate marriage, were it to happen, would unite a suddenly hot movie production company with Hollywood's leading independent movie and TV studio, which is behind the "Saw" and "Tyler Perry" franchises.

So far, however, Summit has played hard to get.

A few weeks before the late November release of Summit's box office smash "Twilight," the company headed by Patrick Wachsberger and Rob Friedman, was approached by Lionsgate about a potential merger. Lionsgate, well aware of the teen vampire film's hot pre-release buzz, made an offer for Summit but was rebuffed because the price was too low.

Lionsgate and Summit, which are located right around the corner from each other in Santa Monica, say privately that there have been no formal talks since last fall. That's not to say that Lionsgate Chief Executive Jon Feltheimer and Summit's Friedman, who are golfing buddies, would never discuss it between rounds. Who knows?

After all, "Twilight," which was made for $37 million and grossed $341 million worldwide, is a highly prized new movie franchise, one that would fit nicely with Lionsgate's strategy of producing moderately budgeted movies targeted at a specific audience. The sequel, "New Moon," based on the second novel of author Stephenie Meyer's popular four-book series, is due in theaters Nov. 25 of this year. The first film's director, Catherine Hardwicke, dropped out for the next installment and was replaced by Chris Weitz, whose previous credits include "The Golden Compass" and "About a Boy."

"Twilight" put the nearly 2-year-old Summit on the Hollywood map. The start-up's first five releases included such box office flops as "Penelope," "Fly Me to the Moon" and "Sex Drive." Next up for the production and international sales company is "Push," a supernatural thriller with Dakota Fanning that opens Friday, and "Knowing," a mystery thriller starring Nicolas Cage, on March 20.

--Claudia Eller

Photos: Rob Friedman, left (Kevin Winter/Getty Images) and Jon Feltheimer (Vince Bucci/Getty Images)

To virtually no one's surprise, the Screen Actors Guild and the major studios announced late Wednesday that they will return to the negotiating table Tuesday to try to forge a new contract for actors.

The move comes only two days after SAG's board hired a new negotiator, John McGuire, and a new interim executive director, David White, following the ouster of Doug Allen. At the same time, the board formed a new "task force" to replace the previous negotating committee.

Moderates who orchestrated the shake-up are expected to move quickly to finalize a new contract, which will be modeled on deals secured over the past year by three other talent unions. Their challenge will be to obtain improvements over the studios' previous "final offer" that will be acceptable to members and demonstrate that the leadership didn't capitulate under pressure.

SAG members have been working without a contract since June 30.

-- Richard Verrier

Twentieth Century Fox has agreed to co-finance the third movie in the “Chronicles of Narnia” series, pending approval of the final script and shooting budget. If all goes as planned, Fox and Walden Media, which controls the movie rights to C.S. Lewis’ classic children's books, hope to begin production on "The Voyage of the Dawn Treader" by late summer so it will be ready for holiday 2010 release.

First, however, Fox and Walden have to hire a screenwriter to do another pass on the script that was last rewritten by Richard LaGravenese, whose credits include "Freedom Writers" and "The Horse Whisperer." The movie companies are looking to make the film for about $140 million. Michael Apted, who made "Amazing Grace" and the 1999 Bond flick "The World Is Not Enough," is on board to direct.

Fox is taking a financial gamble that Disney was unwilling to wage despite helping bankroll the first two films in the "Narnia" family franchise. Walden, owned by entrepreneur Phil Anschutz, was forced to seek a new financial partner on “Dawn Treader” after Disney balked at the cost and opted out.

Fox was the most likely partner because the studio already markets and distributes Walden movies under its Fox Walden label.

Over the last few weeks, Walden chief David Weil and “Narnia” producer Mark Johnson have held a series of meetings with top Fox executives, including movie chiefs Tom Rothman and Jim Gianopulos, to discuss script revisions and the movie's cost.

While the targeted budget of “Dawn Treader” is much lower than that of the last Narnia movie, “Prince Caspian,” which cost $225 million to produce, it's still a big gamble. Released by Disney last year, the sequel was much less popular than the first "Narnia" movie, “The Lion, the Witch and the Wardrobe.” The sequel grossed $419 million worldwide compared with its 2005 predecessor, which generated $745 million in ticket sales.

Disney and Walden hope that DVD sales of "Prince Caspian" will help pull the movie out of the red.

-- Claudia Eller

Photo: "The Chronicles of Narnia: Prince Caspian" is courtesy of Walt Disney Studios

Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.

The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies. 

A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.

A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Vivendi chief 'very pleased' with NBC Universal

Is French media giant Vivendi souring on its investment in NBC Universal -- perhaps un petit peu?

Mais non, says Vivendi Chief Executive Jean-Bernard Levy.

Nonetheless, Vivendi plans to write down the value of its 20% stake in NBC Universal next month when the French company reports its quarterly earnings. For now, Vivendi won't discuss the amount of the anticipated noncash charge, which is necessary to reflect the lower valuation of the U.S. company that boasts the NBC broadcast network, cable channels USA Network, Bravo and MSNBC, and Universal Studios. 

General Electric Co., whose stock has been pummeled in the market meltdown, owns the controlling 80% of NBC Universal. When GE and Vivendi combined their entertainment properties in 2004 to create NBC Universal, the enterprise was valued at more than $40 billion, making Vivendi's portion worth around $8 billion. (GE reiterated Tuesday that it had no plans to reduce the value of NBC that it carries on its battered books.) 

"It's a tough environment, but we are very pleased with NBC," Levy said during an interview in Santa Monica. "We are pleased with the profits that NBC has achieved; the overall performance of NBC U has been very good." 

Vivendi had an opportunity in December to divest its stake in NBC Universal  -- but it chose not to. The timing was not right because of the U.S. media company's depressed trading multiples, Levy said. Vivendi intends to hang on to its interest until the market bounces back.

How long will Vivendi be part of the peacock company? Levy would not tip his hand other than to say, "We are not long-term owners." He added that his company prefers to be in the "driver's seat" of its investments, and that is not the case with NBC.

Still, Levy is a big fan of the guy behind the wheel, NBC Universal CEO Jeff Zucker.

"I like him very much, he is an excellent manager and he certainly knows his business," Levy said of Zucker. The two CEOs spent time together last weekend in Tampa, where they attended the Super Bowl, which was televised by NBC and generated huge ratings.

Levy now is expecting Zucker to make similar gains in the financial field. "We are happy that we will share in the potential value creation that he and his team will implement," Levy said.

-- Meg James

Photo of Vivendi CEO Jean-Bernard Levy by Alex Pham/Los Angeles Times

A judge on Tuesday denied a temporary restraining order sought by SAG President Alan Rosenberg to block negotiations between the union and the major studios.

Rosenberg and three other board members are seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee, contending that the action violated the state's corporate code.

But Los Angeles Superior Court Judge James Chalfant denied the request for an injunction, citing several technical errors in the lawsuit, and ordered that the complaint be resubmitted. A hearing on the case will be held Thursday. The litigation has delayed contract negotiations that were set to resume this week.

"They are so desperate to hold on to their power that they are willing to burn down their own house,'' said New York SAG President Sam Freed, one of the board members being sued. Rosenberg declined to comment.

-- Richard Verrier

Financial news network Bloomberg Television today pulled the plug on its "Night Talk" program and bid goodbye to longtime anchor Mike Schneider.

Schneider's last program was Monday night.

Additional staff cuts and TV programming lineup changes are expected to be announced Wednesday. The moves are part of broad restructuring of the multimedia group, which includes Bloomberg Television and Bloomberg Radio, a person familiar with the situation said.

The private company, founded by New York Mayor Michael Bloomberg, generates about $6 billion a year in revenue.

But the shuffle has already begun. Bloomberg Television Managing Editor John Meehan left the company last week. His departure comes four months after former NBC, CBS and Sony BMG Music executive Andy Lack was hired to manage Bloomberg's television and radio operations. Lack brought in David Rhodes from the Fox News Channel to run the television operations.

Bloomberg operates 24 hours a day and has TV channels in 11 countries, but its sprawling operations are seen as disjointed and not making full use of its team of reporters in 143 bureaus around the world.

Although the company plans to eliminate programs and trim employees, it plans to hire additional staff this year to improve its programming to better position the company for growth, said the person familiar with the situation.

"While other news organizations are shrinking, we continue to expand, improving our existing products while investing in new ones," Bloomberg Chairman Peter Grauer said in a statement in October when Lack was hired.

-- Meg James

Summit Entertainment and Lionsgate aren't getting hitched. At least not yet, if ever.

The idea has been broached, according to insiders, but nothing is cooking. Such a corporate marriage, were it to happen, would unite a suddenly hot movie production company with Hollywood's leading independent movie and TV studio, which is behind the "Saw" and "Tyler Perry" franchises.

So far, however, Summit has played hard to get.

A few weeks before the late November release of Summit's box office smash "Twilight," the company headed by Patrick Wachsberger and Rob Friedman, was approached by Lionsgate about a potential merger. Lionsgate, well aware of the teen vampire film's hot pre-release buzz, made an offer for Summit but was rebuffed because the price was too low.

Lionsgate and Summit, which are located right around the corner from each other in Santa Monica, say privately that there have been no formal talks since last fall. That's not to say that Lionsgate Chief Executive Jon Feltheimer and Summit's Friedman, who are golfing buddies, would never discuss it between rounds. Who knows?

After all, "Twilight," which was made for $37 million and grossed $341 million worldwide, is a highly prized new movie franchise, one that would fit nicely with Lionsgate's strategy of producing moderately budgeted movies targeted at a specific audience. The sequel, "New Moon," based on the second novel of author Stephenie Meyer's popular four-book series, is due in theaters Nov. 25 of this year. The first film's director, Catherine Hardwicke, dropped out for the next installment and was replaced by Chris Weitz, whose previous credits include "The Golden Compass" and "About a Boy."

"Twilight" put the nearly 2-year-old Summit on the Hollywood map. The start-up's first five releases included such box office flops as "Penelope," "Fly Me to the Moon" and "Sex Drive." Next up for the production and international sales company is "Push," a supernatural thriller with Dakota Fanning that opens Friday, and "Knowing," a mystery thriller starring Nicolas Cage, on March 20.

--Claudia Eller

Photos: Rob Friedman, left (Kevin Winter/Getty Images) and Jon Feltheimer (Vince Bucci/Getty Images)

To virtually no one's surprise, the Screen Actors Guild and the major studios announced late Wednesday that they will return to the negotiating table Tuesday to try to forge a new contract for actors.

The move comes only two days after SAG's board hired a new negotiator, John McGuire, and a new interim executive director, David White, following the ouster of Doug Allen. At the same time, the board formed a new "task force" to replace the previous negotating committee.

Moderates who orchestrated the shake-up are expected to move quickly to finalize a new contract, which will be modeled on deals secured over the past year by three other talent unions. Their challenge will be to obtain improvements over the studios' previous "final offer" that will be acceptable to members and demonstrate that the leadership didn't capitulate under pressure.

SAG members have been working without a contract since June 30.

-- Richard Verrier

Twentieth Century Fox has agreed to co-finance the third movie in the “Chronicles of Narnia” series, pending approval of the final script and shooting budget. If all goes as planned, Fox and Walden Media, which controls the movie rights to C.S. Lewis’ classic children's books, hope to begin production on "The Voyage of the Dawn Treader" by late summer so it will be ready for holiday 2010 release.

First, however, Fox and Walden have to hire a screenwriter to do another pass on the script that was last rewritten by Richard LaGravenese, whose credits include "Freedom Writers" and "The Horse Whisperer." The movie companies are looking to make the film for about $140 million. Michael Apted, who made "Amazing Grace" and the 1999 Bond flick "The World Is Not Enough," is on board to direct.

Fox is taking a financial gamble that Disney was unwilling to wage despite helping bankroll the first two films in the "Narnia" family franchise. Walden, owned by entrepreneur Phil Anschutz, was forced to seek a new financial partner on “Dawn Treader” after Disney balked at the cost and opted out.

Fox was the most likely partner because the studio already markets and distributes Walden movies under its Fox Walden label.

Over the last few weeks, Walden chief David Weil and “Narnia” producer Mark Johnson have held a series of meetings with top Fox executives, including movie chiefs Tom Rothman and Jim Gianopulos, to discuss script revisions and the movie's cost.

While the targeted budget of “Dawn Treader” is much lower than that of the last Narnia movie, “Prince Caspian,” which cost $225 million to produce, it's still a big gamble. Released by Disney last year, the sequel was much less popular than the first "Narnia" movie, “The Lion, the Witch and the Wardrobe.” The sequel grossed $419 million worldwide compared with its 2005 predecessor, which generated $745 million in ticket sales.

Disney and Walden hope that DVD sales of "Prince Caspian" will help pull the movie out of the red.

-- Claudia Eller

Photo: "The Chronicles of Narnia: Prince Caspian" is courtesy of Walt Disney Studios

Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.

The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies. 

A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.

A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Judge rebuffs SAG's Rosenberg

A judge on Tuesday denied a temporary restraining order sought by SAG President Alan Rosenberg to block negotiations between the union and the major studios.

Rosenberg and three other board members are seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee, contending that the action violated the state's corporate code.

But Los Angeles Superior Court Judge James Chalfant denied the request for an injunction, citing several technical errors in the lawsuit, and ordered that the complaint be resubmitted. A hearing on the case will be held Thursday. The litigation has delayed contract negotiations that were set to resume this week.

"They are so desperate to hold on to their power that they are willing to burn down their own house,'' said New York SAG President Sam Freed, one of the board members being sued. Rosenberg declined to comment.

-- Richard Verrier

Financial news network Bloomberg Television today pulled the plug on its "Night Talk" program and bid goodbye to longtime anchor Mike Schneider.

Schneider's last program was Monday night.

Additional staff cuts and TV programming lineup changes are expected to be announced Wednesday. The moves are part of broad restructuring of the multimedia group, which includes Bloomberg Television and Bloomberg Radio, a person familiar with the situation said.

The private company, founded by New York Mayor Michael Bloomberg, generates about $6 billion a year in revenue.

But the shuffle has already begun. Bloomberg Television Managing Editor John Meehan left the company last week. His departure comes four months after former NBC, CBS and Sony BMG Music executive Andy Lack was hired to manage Bloomberg's television and radio operations. Lack brought in David Rhodes from the Fox News Channel to run the television operations.

Bloomberg operates 24 hours a day and has TV channels in 11 countries, but its sprawling operations are seen as disjointed and not making full use of its team of reporters in 143 bureaus around the world.

Although the company plans to eliminate programs and trim employees, it plans to hire additional staff this year to improve its programming to better position the company for growth, said the person familiar with the situation.

"While other news organizations are shrinking, we continue to expand, improving our existing products while investing in new ones," Bloomberg Chairman Peter Grauer said in a statement in October when Lack was hired.

-- Meg James

Summit Entertainment and Lionsgate aren't getting hitched. At least not yet, if ever.

The idea has been broached, according to insiders, but nothing is cooking. Such a corporate marriage, were it to happen, would unite a suddenly hot movie production company with Hollywood's leading independent movie and TV studio, which is behind the "Saw" and "Tyler Perry" franchises.

So far, however, Summit has played hard to get.

A few weeks before the late November release of Summit's box office smash "Twilight," the company headed by Patrick Wachsberger and Rob Friedman, was approached by Lionsgate about a potential merger. Lionsgate, well aware of the teen vampire film's hot pre-release buzz, made an offer for Summit but was rebuffed because the price was too low.

Lionsgate and Summit, which are located right around the corner from each other in Santa Monica, say privately that there have been no formal talks since last fall. That's not to say that Lionsgate Chief Executive Jon Feltheimer and Summit's Friedman, who are golfing buddies, would never discuss it between rounds. Who knows?

After all, "Twilight," which was made for $37 million and grossed $341 million worldwide, is a highly prized new movie franchise, one that would fit nicely with Lionsgate's strategy of producing moderately budgeted movies targeted at a specific audience. The sequel, "New Moon," based on the second novel of author Stephenie Meyer's popular four-book series, is due in theaters Nov. 25 of this year. The first film's director, Catherine Hardwicke, dropped out for the next installment and was replaced by Chris Weitz, whose previous credits include "The Golden Compass" and "About a Boy."

"Twilight" put the nearly 2-year-old Summit on the Hollywood map. The start-up's first five releases included such box office flops as "Penelope," "Fly Me to the Moon" and "Sex Drive." Next up for the production and international sales company is "Push," a supernatural thriller with Dakota Fanning that opens Friday, and "Knowing," a mystery thriller starring Nicolas Cage, on March 20.

--Claudia Eller

Photos: Rob Friedman, left (Kevin Winter/Getty Images) and Jon Feltheimer (Vince Bucci/Getty Images)

To virtually no one's surprise, the Screen Actors Guild and the major studios announced late Wednesday that they will return to the negotiating table Tuesday to try to forge a new contract for actors.

The move comes only two days after SAG's board hired a new negotiator, John McGuire, and a new interim executive director, David White, following the ouster of Doug Allen. At the same time, the board formed a new "task force" to replace the previous negotating committee.

Moderates who orchestrated the shake-up are expected to move quickly to finalize a new contract, which will be modeled on deals secured over the past year by three other talent unions. Their challenge will be to obtain improvements over the studios' previous "final offer" that will be acceptable to members and demonstrate that the leadership didn't capitulate under pressure.

SAG members have been working without a contract since June 30.

-- Richard Verrier

Twentieth Century Fox has agreed to co-finance the third movie in the “Chronicles of Narnia” series, pending approval of the final script and shooting budget. If all goes as planned, Fox and Walden Media, which controls the movie rights to C.S. Lewis’ classic children's books, hope to begin production on "The Voyage of the Dawn Treader" by late summer so it will be ready for holiday 2010 release.

First, however, Fox and Walden have to hire a screenwriter to do another pass on the script that was last rewritten by Richard LaGravenese, whose credits include "Freedom Writers" and "The Horse Whisperer." The movie companies are looking to make the film for about $140 million. Michael Apted, who made "Amazing Grace" and the 1999 Bond flick "The World Is Not Enough," is on board to direct.

Fox is taking a financial gamble that Disney was unwilling to wage despite helping bankroll the first two films in the "Narnia" family franchise. Walden, owned by entrepreneur Phil Anschutz, was forced to seek a new financial partner on “Dawn Treader” after Disney balked at the cost and opted out.

Fox was the most likely partner because the studio already markets and distributes Walden movies under its Fox Walden label.

Over the last few weeks, Walden chief David Weil and “Narnia” producer Mark Johnson have held a series of meetings with top Fox executives, including movie chiefs Tom Rothman and Jim Gianopulos, to discuss script revisions and the movie's cost.

While the targeted budget of “Dawn Treader” is much lower than that of the last Narnia movie, “Prince Caspian,” which cost $225 million to produce, it's still a big gamble. Released by Disney last year, the sequel was much less popular than the first "Narnia" movie, “The Lion, the Witch and the Wardrobe.” The sequel grossed $419 million worldwide compared with its 2005 predecessor, which generated $745 million in ticket sales.

Disney and Walden hope that DVD sales of "Prince Caspian" will help pull the movie out of the red.

-- Claudia Eller

Photo: "The Chronicles of Narnia: Prince Caspian" is courtesy of Walt Disney Studios

Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.

The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies. 

A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.

A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Bloomberg Television cuts staff; says goodbye to 'Night Talk'

Financial news network Bloomberg Television today pulled the plug on its "Night Talk" program and bid goodbye to longtime anchor Mike Schneider.

Schneider's last program was Monday night.

Additional staff cuts and TV programming lineup changes are expected to be announced Wednesday. The moves are part of broad restructuring of the multimedia group, which includes Bloomberg Television and Bloomberg Radio, a person familiar with the situation said.

The private company, founded by New York Mayor Michael Bloomberg, generates about $6 billion a year in revenue.

But the shuffle has already begun. Bloomberg Television Managing Editor John Meehan left the company last week. His departure comes four months after former NBC, CBS and Sony BMG Music executive Andy Lack was hired to manage Bloomberg's television and radio operations. Lack brought in David Rhodes from the Fox News Channel to run the television operations.

Bloomberg operates 24 hours a day and has TV channels in 11 countries, but its sprawling operations are seen as disjointed and not making full use of its team of reporters in 143 bureaus around the world.

Although the company plans to eliminate programs and trim employees, it plans to hire additional staff this year to improve its programming to better position the company for growth, said the person familiar with the situation.

"While other news organizations are shrinking, we continue to expand, improving our existing products while investing in new ones," Bloomberg Chairman Peter Grauer said in a statement in October when Lack was hired.

-- Meg James

Summit Entertainment and Lionsgate aren't getting hitched. At least not yet, if ever.

The idea has been broached, according to insiders, but nothing is cooking. Such a corporate marriage, were it to happen, would unite a suddenly hot movie production company with Hollywood's leading independent movie and TV studio, which is behind the "Saw" and "Tyler Perry" franchises.

So far, however, Summit has played hard to get.

A few weeks before the late November release of Summit's box office smash "Twilight," the company headed by Patrick Wachsberger and Rob Friedman, was approached by Lionsgate about a potential merger. Lionsgate, well aware of the teen vampire film's hot pre-release buzz, made an offer for Summit but was rebuffed because the price was too low.

Lionsgate and Summit, which are located right around the corner from each other in Santa Monica, say privately that there have been no formal talks since last fall. That's not to say that Lionsgate Chief Executive Jon Feltheimer and Summit's Friedman, who are golfing buddies, would never discuss it between rounds. Who knows?

After all, "Twilight," which was made for $37 million and grossed $341 million worldwide, is a highly prized new movie franchise, one that would fit nicely with Lionsgate's strategy of producing moderately budgeted movies targeted at a specific audience. The sequel, "New Moon," based on the second novel of author Stephenie Meyer's popular four-book series, is due in theaters Nov. 25 of this year. The first film's director, Catherine Hardwicke, dropped out for the next installment and was replaced by Chris Weitz, whose previous credits include "The Golden Compass" and "About a Boy."

"Twilight" put the nearly 2-year-old Summit on the Hollywood map. The start-up's first five releases included such box office flops as "Penelope," "Fly Me to the Moon" and "Sex Drive." Next up for the production and international sales company is "Push," a supernatural thriller with Dakota Fanning that opens Friday, and "Knowing," a mystery thriller starring Nicolas Cage, on March 20.

--Claudia Eller

Photos: Rob Friedman, left (Kevin Winter/Getty Images) and Jon Feltheimer (Vince Bucci/Getty Images)

To virtually no one's surprise, the Screen Actors Guild and the major studios announced late Wednesday that they will return to the negotiating table Tuesday to try to forge a new contract for actors.

The move comes only two days after SAG's board hired a new negotiator, John McGuire, and a new interim executive director, David White, following the ouster of Doug Allen. At the same time, the board formed a new "task force" to replace the previous negotating committee.

Moderates who orchestrated the shake-up are expected to move quickly to finalize a new contract, which will be modeled on deals secured over the past year by three other talent unions. Their challenge will be to obtain improvements over the studios' previous "final offer" that will be acceptable to members and demonstrate that the leadership didn't capitulate under pressure.

SAG members have been working without a contract since June 30.

-- Richard Verrier

Twentieth Century Fox has agreed to co-finance the third movie in the “Chronicles of Narnia” series, pending approval of the final script and shooting budget. If all goes as planned, Fox and Walden Media, which controls the movie rights to C.S. Lewis’ classic children's books, hope to begin production on "The Voyage of the Dawn Treader" by late summer so it will be ready for holiday 2010 release.

First, however, Fox and Walden have to hire a screenwriter to do another pass on the script that was last rewritten by Richard LaGravenese, whose credits include "Freedom Writers" and "The Horse Whisperer." The movie companies are looking to make the film for about $140 million. Michael Apted, who made "Amazing Grace" and the 1999 Bond flick "The World Is Not Enough," is on board to direct.

Fox is taking a financial gamble that Disney was unwilling to wage despite helping bankroll the first two films in the "Narnia" family franchise. Walden, owned by entrepreneur Phil Anschutz, was forced to seek a new financial partner on “Dawn Treader” after Disney balked at the cost and opted out.

Fox was the most likely partner because the studio already markets and distributes Walden movies under its Fox Walden label.

Over the last few weeks, Walden chief David Weil and “Narnia” producer Mark Johnson have held a series of meetings with top Fox executives, including movie chiefs Tom Rothman and Jim Gianopulos, to discuss script revisions and the movie's cost.

While the targeted budget of “Dawn Treader” is much lower than that of the last Narnia movie, “Prince Caspian,” which cost $225 million to produce, it's still a big gamble. Released by Disney last year, the sequel was much less popular than the first "Narnia" movie, “The Lion, the Witch and the Wardrobe.” The sequel grossed $419 million worldwide compared with its 2005 predecessor, which generated $745 million in ticket sales.

Disney and Walden hope that DVD sales of "Prince Caspian" will help pull the movie out of the red.

-- Claudia Eller

Photo: "The Chronicles of Narnia: Prince Caspian" is courtesy of Walt Disney Studios

Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.

The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies. 

A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.

A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Summit and Lionsgate discussed merger last fall

Summit Entertainment and Lionsgate aren't getting hitched. At least not yet, if ever.

The idea has been broached, according to insiders, but nothing is cooking. Such a corporate marriage, were it to happen, would unite a suddenly hot movie production company with Hollywood's leading independent movie and TV studio, which is behind the "Saw" and "Tyler Perry" franchises.

So far, however, Summit has played hard to get.

A few weeks before the late November release of Summit's box office smash "Twilight," the company headed by Patrick Wachsberger and Rob Friedman, was approached by Lionsgate about a potential merger. Lionsgate, well aware of the teen vampire film's hot pre-release buzz, made an offer for Summit but was rebuffed because the price was too low.

Lionsgate and Summit, which are located right around the corner from each other in Santa Monica, say privately that there have been no formal talks since last fall. That's not to say that Lionsgate Chief Executive Jon Feltheimer and Summit's Friedman, who are golfing buddies, would never discuss it between rounds. Who knows?

After all, "Twilight," which was made for $37 million and grossed $341 million worldwide, is a highly prized new movie franchise, one that would fit nicely with Lionsgate's strategy of producing moderately budgeted movies targeted at a specific audience. The sequel, "New Moon," based on the second novel of author Stephenie Meyer's popular four-book series, is due in theaters Nov. 25 of this year. The first film's director, Catherine Hardwicke, dropped out for the next installment and was replaced by Chris Weitz, whose previous credits include "The Golden Compass" and "About a Boy."

"Twilight" put the nearly 2-year-old Summit on the Hollywood map. The start-up's first five releases included such box office flops as "Penelope," "Fly Me to the Moon" and "Sex Drive." Next up for the production and international sales company is "Push," a supernatural thriller with Dakota Fanning that opens Friday, and "Knowing," a mystery thriller starring Nicolas Cage, on March 20.

--Claudia Eller

Photos: Rob Friedman, left (Kevin Winter/Getty Images) and Jon Feltheimer (Vince Bucci/Getty Images)

To virtually no one's surprise, the Screen Actors Guild and the major studios announced late Wednesday that they will return to the negotiating table Tuesday to try to forge a new contract for actors.

The move comes only two days after SAG's board hired a new negotiator, John McGuire, and a new interim executive director, David White, following the ouster of Doug Allen. At the same time, the board formed a new "task force" to replace the previous negotating committee.

Moderates who orchestrated the shake-up are expected to move quickly to finalize a new contract, which will be modeled on deals secured over the past year by three other talent unions. Their challenge will be to obtain improvements over the studios' previous "final offer" that will be acceptable to members and demonstrate that the leadership didn't capitulate under pressure.

SAG members have been working without a contract since June 30.

-- Richard Verrier

Twentieth Century Fox has agreed to co-finance the third movie in the “Chronicles of Narnia” series, pending approval of the final script and shooting budget. If all goes as planned, Fox and Walden Media, which controls the movie rights to C.S. Lewis’ classic children's books, hope to begin production on "The Voyage of the Dawn Treader" by late summer so it will be ready for holiday 2010 release.

First, however, Fox and Walden have to hire a screenwriter to do another pass on the script that was last rewritten by Richard LaGravenese, whose credits include "Freedom Writers" and "The Horse Whisperer." The movie companies are looking to make the film for about $140 million. Michael Apted, who made "Amazing Grace" and the 1999 Bond flick "The World Is Not Enough," is on board to direct.

Fox is taking a financial gamble that Disney was unwilling to wage despite helping bankroll the first two films in the "Narnia" family franchise. Walden, owned by entrepreneur Phil Anschutz, was forced to seek a new financial partner on “Dawn Treader” after Disney balked at the cost and opted out.

Fox was the most likely partner because the studio already markets and distributes Walden movies under its Fox Walden label.

Over the last few weeks, Walden chief David Weil and “Narnia” producer Mark Johnson have held a series of meetings with top Fox executives, including movie chiefs Tom Rothman and Jim Gianopulos, to discuss script revisions and the movie's cost.

While the targeted budget of “Dawn Treader” is much lower than that of the last Narnia movie, “Prince Caspian,” which cost $225 million to produce, it's still a big gamble. Released by Disney last year, the sequel was much less popular than the first "Narnia" movie, “The Lion, the Witch and the Wardrobe.” The sequel grossed $419 million worldwide compared with its 2005 predecessor, which generated $745 million in ticket sales.

Disney and Walden hope that DVD sales of "Prince Caspian" will help pull the movie out of the red.

-- Claudia Eller

Photo: "The Chronicles of Narnia: Prince Caspian" is courtesy of Walt Disney Studios

Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.

The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies. 

A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.

A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Actors, studios to return to negotiating table

To virtually no one's surprise, the Screen Actors Guild and the major studios announced late Wednesday that they will return to the negotiating table Tuesday to try to forge a new contract for actors.

The move comes only two days after SAG's board hired a new negotiator, John McGuire, and a new interim executive director, David White, following the ouster of Doug Allen. At the same time, the board formed a new "task force" to replace the previous negotating committee.

Moderates who orchestrated the shake-up are expected to move quickly to finalize a new contract, which will be modeled on deals secured over the past year by three other talent unions. Their challenge will be to obtain improvements over the studios' previous "final offer" that will be acceptable to members and demonstrate that the leadership didn't capitulate under pressure.

SAG members have been working without a contract since June 30.

-- Richard Verrier

Twentieth Century Fox has agreed to co-finance the third movie in the “Chronicles of Narnia” series, pending approval of the final script and shooting budget. If all goes as planned, Fox and Walden Media, which controls the movie rights to C.S. Lewis’ classic children's books, hope to begin production on "The Voyage of the Dawn Treader" by late summer so it will be ready for holiday 2010 release.

First, however, Fox and Walden have to hire a screenwriter to do another pass on the script that was last rewritten by Richard LaGravenese, whose credits include "Freedom Writers" and "The Horse Whisperer." The movie companies are looking to make the film for about $140 million. Michael Apted, who made "Amazing Grace" and the 1999 Bond flick "The World Is Not Enough," is on board to direct.

Fox is taking a financial gamble that Disney was unwilling to wage despite helping bankroll the first two films in the "Narnia" family franchise. Walden, owned by entrepreneur Phil Anschutz, was forced to seek a new financial partner on “Dawn Treader” after Disney balked at the cost and opted out.

Fox was the most likely partner because the studio already markets and distributes Walden movies under its Fox Walden label.

Over the last few weeks, Walden chief David Weil and “Narnia” producer Mark Johnson have held a series of meetings with top Fox executives, including movie chiefs Tom Rothman and Jim Gianopulos, to discuss script revisions and the movie's cost.

While the targeted budget of “Dawn Treader” is much lower than that of the last Narnia movie, “Prince Caspian,” which cost $225 million to produce, it's still a big gamble. Released by Disney last year, the sequel was much less popular than the first "Narnia" movie, “The Lion, the Witch and the Wardrobe.” The sequel grossed $419 million worldwide compared with its 2005 predecessor, which generated $745 million in ticket sales.

Disney and Walden hope that DVD sales of "Prince Caspian" will help pull the movie out of the red.

-- Claudia Eller

Photo: "The Chronicles of Narnia: Prince Caspian" is courtesy of Walt Disney Studios

Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.

The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies. 

A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.

A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Fox agrees to step in on next 'Narnia' movie

Twentieth Century Fox has agreed to co-finance the third movie in the “Chronicles of Narnia” series, pending approval of the final script and shooting budget. If all goes as planned, Fox and Walden Media, which controls the movie rights to C.S. Lewis’ classic children's books, hope to begin production on "The Voyage of the Dawn Treader" by late summer so it will be ready for holiday 2010 release.

First, however, Fox and Walden have to hire a screenwriter to do another pass on the script that was last rewritten by Richard LaGravenese, whose credits include "Freedom Writers" and "The Horse Whisperer." The movie companies are looking to make the film for about $140 million. Michael Apted, who made "Amazing Grace" and the 1999 Bond flick "The World Is Not Enough," is on board to direct.

Fox is taking a financial gamble that Disney was unwilling to wage despite helping bankroll the first two films in the "Narnia" family franchise. Walden, owned by entrepreneur Phil Anschutz, was forced to seek a new financial partner on “Dawn Treader” after Disney balked at the cost and opted out.

Fox was the most likely partner because the studio already markets and distributes Walden movies under its Fox Walden label.

Over the last few weeks, Walden chief David Weil and “Narnia” producer Mark Johnson have held a series of meetings with top Fox executives, including movie chiefs Tom Rothman and Jim Gianopulos, to discuss script revisions and the movie's cost.

While the targeted budget of “Dawn Treader” is much lower than that of the last Narnia movie, “Prince Caspian,” which cost $225 million to produce, it's still a big gamble. Released by Disney last year, the sequel was much less popular than the first "Narnia" movie, “The Lion, the Witch and the Wardrobe.” The sequel grossed $419 million worldwide compared with its 2005 predecessor, which generated $745 million in ticket sales.

Disney and Walden hope that DVD sales of "Prince Caspian" will help pull the movie out of the red.

-- Claudia Eller

Photo: "The Chronicles of Narnia: Prince Caspian" is courtesy of Walt Disney Studios

Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.

The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies. 

A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.

A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Spielberg closes in on debt financing

Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.

The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies. 

A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.

A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Viacom and partners brand new movie channel

Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.

It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.

The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact. 

That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.

But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre." 

"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."

-- Meg James

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

SAG's White seeks to heal wounds

UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.

David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.

SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.

"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."

Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.

But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said.  SAG members have been without a contract since June 30.

-- Richard Verrier

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Universal renews contracts for movie chiefs Marc Shmuger, David Linde

There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.

Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.

In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.

When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.

According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."

And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."

-- Claudia Eller

Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Lionsgate's Tom Ortenberg jumps to Weinstein Co.

Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.

Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.

TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."

Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").

TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.

Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."

Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.

-- Claudia Eller

Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

SAG board members move to oust chief negotiator

The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.

A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.

For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."

"These much needed changes will allow SAG to chart a new course," the group said.

The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.

The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.

SAG had no immediate comment.

-- Richard Verrier

Photo: Ken Hively / Los Angeles Times

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Droopy feathers among the peacock's TV stations

General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.

Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%.  GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.

All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales. 

The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.

Saving grace: cable television.

The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.

"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.

It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"

But Wall Street wasn't in a singing mood.

GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.

-- Meg James

Photo: NBC offices in Burbank. Credit: David McNew / Getty Images

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Hollywood SAG members speak up for Allen

Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.

Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.

"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.

They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.

Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.

It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.

— Richard Verrier

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Mon Dieu! France honors DGA's Jay Roth

In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.

The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.

Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.

Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.

Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.

-- Richard Verrier

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Televisa and Univision settle lawsuit

A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.

The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.

Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.

-- Meg James

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Worker-writers settle reality TV lawsuits

Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.

The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses." 

Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.

About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.

"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."

A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.

Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.

-- Richard Verrier

Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

SAG faction takes fresh shot at Allen

The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.   

In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.

The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.

"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."

The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.

But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.

Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.

If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.

A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."

The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.

"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."

-- Richard Verrier

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

SAG board members spurn Allen gambit

Some call it a Hail Mary pass.

Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.

But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.

In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.

That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.

Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."

But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.

"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."

Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."

Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.

Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.

People close to the situation said that Allen's fate could be determined as early as next week.

Allen was not available for comment.

SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable,"  he said. "They want to get rid of Doug because he's too strong and too much of a unionist."

-- Richard Verrier

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Spielberg and Reliance pony up to Paramount for DreamWorks projects

Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.

Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.

Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.

In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.

Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.

Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures

A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.

-- Claudia Eller

Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

On-location production in Los Angeles hits record low

As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.

Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county.  Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.

Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to  finish productions before June 30th, when the actors' contract expired.

But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.

"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."

Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.

Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that  helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.

-- Richard Verrier

Photo: Karen Tapia-Andersen / Los Angeles Times

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Actors union moderates move closer to voting out chief negotiator

Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.

Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.

Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.

Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.

-- Richard Verrier

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Actors union moderates maneuvering to oust chief negotiator

Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.

As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.

That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.

Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen.  Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.

Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.

In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.

-- Richard Verrier

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Warner Bros. outsourcing jobs to India and Poland

It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.

Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.

Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.

All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.

Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."

-- Claudia Eller

Photo: Warner Bros. in Burbank by Kevork Djansezian/AP

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

'Watchmen' producer speaks out on ruling

The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.

In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.

"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"

Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.

Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.

Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.

"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.

The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."

-- John Horn

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Paramount's Brad Grey signs on for five more years

Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.

The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.

At the same time, Grey's box office and management track record has been mixed.

He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford.  Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."

There also been a healthy dose of internal turmoil and controversy.

Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.

Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.

Grey acknowledges that his nearly four-year run has been bumpy.

"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."

The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."

-- Claudia Eller

Photo: Wally Skalij / Los Angeles Times

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Lionsgate scoops up TV Guide Network

In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.

TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.

Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.

It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."

-- Claudia Eller

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

SAG moderates seek to oust negotiating committee

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Viacom threatens to yank programming off Time Warner Cable systems

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

SAG delays strike vote, calls special board meeting

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

'No Strike' protest draws small turnout

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Spielberg expected to dig into own pockets to buy DreamWorks projects from Paramount

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Disney hit with suit by film financing partner

Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."

In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.

Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.

"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."

Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.

Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.

Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."

It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.

Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.

The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.

-- Claudia Eller

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Court compels Yari Film Group's releasing unit into Chapter 11

Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.

"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.

The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.

Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."

YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.

The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.

YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.

“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.

-- Claudia Eller

Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

New York yells 'cut' on SAG strike vote

The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.

The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.

In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.

In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."

Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.

The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.

UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."

-- Richard Verrier

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

ReelzChannel cancels 'Dailies,' lays off 40 in L.A.

ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.

The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.

Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.

Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day.  He said the company remained "fully engaged" in its cable channel and online operation.

"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said.  "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."

-- Meg James

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

SAG sets Jan. 2 as date for strike vote

It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.

Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.

Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."

SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.

The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.

A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.

-- Richard Verrier

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

SAG: big union + small turnout = strike authorization?

There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.

A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.

The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.

But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.

That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.

SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.

While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.

"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated. 

The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.

Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.

Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.

While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.

Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.

Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.

"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."

So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.

Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.

But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold.  SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."

Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.

But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.

Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."

-- Richard Verrier

(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

NBC's Friday morning massacre

After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.

NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.

Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation.  The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit. 

NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis.  He will remain at the company.

The shakeup was first reported by the website www.deadlinehollywooddaily.com

Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday.  The outspoken executive had clashed with Zucker and Silverman.  Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.

Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007.  But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.

-- Meg James

(Photo: Ben Silverman courtesy NBC Universal, Inc.)

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

France's Vivendi still (Hearts) NBC Universal

French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.

Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal.  If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.

For GE, the timing would not have been ideal.  The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy.  Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.

Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake. 

The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.

"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.

Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion.  "And we are very happy with NBCU's management team," she said.

NBC Universal declined to comment.  In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.

— Meg James

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

SAG faction cool on strike vote

In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.

SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.

In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.

"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.

SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."

Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.

Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.

Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.

The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.

-- Richard Verrier

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Screen Actors Guild and studios amp up the rhetoric war

With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.

In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.

"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."

The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.

SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.

The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.

Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."

Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.

In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.

On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.

— Richard Verrier

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Writers Guild and Tyler Perry make peace, sign deal

The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.

The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."

But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.

The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.

The guild declined to comment on the matter. Perry could not reached.

-- Richard Verrier and Greg Braxton

Photo of Tyler Perry by Kevin Winter/Getty Images

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

MySpace Music (finally) names president

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Screen Actors Guild to seek strike authorization vote

The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.

"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."

SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.

SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.

The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.

The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.

What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.

Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.

It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.

But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.

During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.

The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.

The AMPTP had no immediate response.

-- Richard Verrier

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

The Silverman lining in NBC's cloud

If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.

On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.

And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.

Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.

Almost from the start, some have questioned Silverman's commitment to NBC.

For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.

But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff. 

Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.

Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.

If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.

All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.

But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).

Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.

"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."   

-- Meg James

Photo: NBC Universal

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Alice would have dug the Web, we're sure

The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.

Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.

The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.

That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.

The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.

That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.

-- Richard Verrier

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Sony braces for life without Bond

The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.

As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.

But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."

When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.

So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).

That's not to say Pascal & Co. won't miss Bond.

"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."

True but then again, given MGM's current financial straits, never say never.

-- Claudia Eller

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

SAG and studios agree to meet with mediator

The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.

Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.

Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.

Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.

Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.

The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.

-- Richard Verrier

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Granat out at Walden Media

The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.

As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.

David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.

Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.

Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.

Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."

Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.

In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.

--Claudia Eller

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Film Roman pencils in new chief

Film Roman, the Burbank-based studio best known for producing the animation behind Fox's hit show "The Simpsons," has a new creative chief.

The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of  the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.

Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.

A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses.  In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.

Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.

--Richard Verrier

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Redstone tries to quell Viacom and CBS investor fears

Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.

Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.

Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.

"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."

The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.

However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.

Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.

Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.

Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.

-- Claudia Eller

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

A fumble for NFL Players Assn. and SAG's Allen

If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.

A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.

Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.

The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.

The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.

-- Richard Verrier

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Verrone cops award for best performance in a strike

Here's one award the studios won't be heralding in ads in the Hollywood trades.

Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."

Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."

The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.

Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."

Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.

-- Richard Verrier

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Negotiations yes -- but not with SAG

The studios will return to the bargaining table Monday -- but not with Hollywood's actors.

Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.

IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.

The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Lions Gate slashing 8% of workforce

As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.

Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.

Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.

Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Hollywood sings the Blu(e)s

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Slowing economy, or something, hits studios

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

AMC: no IPO after all

Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.

The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.

The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.

AMC originally filed a $750-million IPO in December 2006, as  private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.

The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.

-- Richard Verrier

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Paramount and Sony might co-parent "Tintin"

It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.

"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.

Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.

Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."

Officials from Paramount and Sony declined to comment.

Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.

One risk at a time, guys.

-- Claudia Eller

Photo: Jacques Demarthon / AFP/Getty Images

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Studios meet with federal mediator on actor contract talks

Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.

As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.

On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."

People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.

-- Richard Verrier

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Declining asset values trigger huge CBS losses

Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.

For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.

In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.

Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.

Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.

-- Meg James

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Protests and people greet 'Milk' premiere

Harvey Milk would have been proud.

More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."

When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.

Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.

The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.

"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.

— Claudia Eller

Photo: Noah Berger/AP

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

ABC: Not Another Barack Channel

Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.

The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.

Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.

ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)

CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.

Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.

ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.

But it was too late.

“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.

That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.

Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.

“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”

-- Meg James

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Cometh the penguin (to a box store near you)

It was only a matter of time before Club Penguin's online inhabitants waddled into retail.

Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays. 

As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.

Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl. 

Hollywood learned long ago that penguins are box-office gold.

The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer,  Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.

Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins." 

-- Dawn C. Chmielewski

(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

FilmL.A. selects new president

FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.

FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.

Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.

Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.

"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."

-- Richard Verrier

Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

'Kung Fu Panda' to drive DreamWorks Animation third-quarter results

One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.

"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.

But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year.  As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.

Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa,"  which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.

"I think they will do well in the economic downturn," Pachter said.

To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters.  And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)

"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."

--Richard Verrier

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

New report: EMI lost $1.2 billion, revenue declined

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Digital Domain shakes up management

Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday. 

The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm.  He replaces Mark Miller, who remains the company's president, according to a statement.

The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.

The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.

Digital Domain says the management moves do not signal a change in longterm strategy.

Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.

Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.

-- Richard Verrier

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Ticketmaster gets in the artist management game

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Studios agree to mediation

No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.

The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today  that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."

But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."

The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.

-- Richard Verrier

Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

SAG's Allen on another playing field

While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.

The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.

Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.

The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.

The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.

Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.

-Richard Verrier

Photo: Doug Allen by Anne Cusack/Los Angeles Times

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Viacom Inc.'s Sumner Redstone files for divorce

UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage.  While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "

Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.

The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.

Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey.  Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.

Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.

The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.

The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times.  It is worth noting that Bear Stearns also did not survive.

   -- Claudia Eller and Meg James   

Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press   

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Ryan Kavanaugh angling to buy Universal's Rogue Pictures

Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.

Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.

If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.

It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.

Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.

Executives from Universal and Relativity declined to comment.

-- Claudia Eller

Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Universal Studios to open "Transformers" attraction

The only question is what took them so long ...

The battling robots of "Transformers"  will return -- as a 3D ride at Universal Studios Hollywood and Singapore.  Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles.  The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.

-- Dawn Chmielewski

Renderings courtesy of Universal Parks & Resorts.

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Netflix subscriber growth narrows

Netflix Inc. investors are realizing that even cheap entertainment isn’t entirely immune to a recession.

Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.

The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.

Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents. 

The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).

And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

SAG seeks federal mediator, holds off strike authorization vote

In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.

The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.

But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.

“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.

Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.

“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

SAG drama ending soon: Strike that

When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.

But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.

Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote.  Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.

Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.

But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.

No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.

Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.

Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.

In other words, this drama won't end any time soon.

-- Richard Verrier

Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

NBC Universal to make $500 million in cuts

NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.   

Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.

The cuts were first reported by Broadcasting & Cable.

NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.

The Zucker memo in full:

"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.

As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.

While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.  We have also asked them to find savings by going through our Sourcing department for all major purchases.

This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.

We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.

Thank you for your support.

Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press

 

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Stocks, options and rock 'n roll: U2 picks up Live Nation equity

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

NBC's Telemundo lays off 5% of workforce

 

Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.

"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.

The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.

Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.

The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.   

"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."

This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.

-- Meg James

Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

New mashup site stirs gnashing at SAG, elsewhere

Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?

A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.

But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."

Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.

Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.

More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.

Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.

"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."

-- Richard Verrier

Photo: A mashup from Mashface.com

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Live Nation picking up venues one by one

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

The Redstones and the mystery of the debt covenants

The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.

Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.

Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.

“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”

Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.

Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.

The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.

-- Claudia Eller

Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Lionsgate's 'Mad' man signs on until 2014

By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.

Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.

"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.

Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.

Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.

It looks like Lionsgate  really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.

The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.

"I'm still the lowest paid executive in town," says Feltheimer.

In Hollywood, of course, low can be pretty high.

-- Claudia Eller

Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Nothing ridiculous about 'Religulous' grosses

By this weekend the nonbelievers will be able to shout, "Hallelujah!"

Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.

Which just goes to show that when it comes to religion and movies, the box office is agnostic.

"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.

That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.

"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.

"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.

"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."

-- Josh Friedman

Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

HBO shakeup continues: Colin Callender steps down

Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.

"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call.  "This is one of those rare occasions where the story that you are being told really is the story."

The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.

Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO.  Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.

Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009.  He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co. 

HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties.  Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films.  Both will report to Lombardo.

Callendar said today that he would assist in the transition for about another month before leaving HBO.

-- Meg James

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Universal agrees to distribute Steven Spielberg's movies from new studio

As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.

Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.

The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.

The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.

This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.

--Claudia Eller

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

Financial Crisis IV: Will Wall Street meltdown sour film sweeteners?

As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.

The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.

"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).

Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).

But don't expect states to give up so easily, says one film incentive program administrator.

Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."

-- Richard Verrier

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi

YouTube goes boob tube

YouTube surfers weary of webcam rants and lo-fi homemade dance routines will now be able to watch real celebrities in professionally produced shows on the popular Google Inc.-owned video site.

Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.

Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.

For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006. 

But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.

The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.

Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.

Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey  says. “But it has one thing that no one else has: millions of viewers a day.”

This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.

YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.

In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.

Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”

But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.

"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.

For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studi